The Financial Conduct Authority has put the UK’s fund-management rulebook back on the drawing board, and the clock on responding is already running. On 14 July, in a co-ordinated package with HM Treasury, the regulator published three consultation papers that together amount to the most significant overhaul of the rules governing alternative investment fund managers since the Alternative Investment Fund Managers Directive was onshored into UK law in 2013. The first response window closes on 16 September, the last on 14 October, which puts the industry on a tight summer of drafting.
The three papers are deliberately linked. CP26/28 rebuilds the core authorisation regime for AIFMs. CP26/26, branded FRAME, tears up the reporting architecture that firms have lived with since AIFMD. CP26/27 reworks how solo-regulated managers pay their staff. Read separately they look like technical housekeeping. Read together they are the FCA’s attempt to redraw the perimeter of UK fund regulation now that it is free of the EU template, and to lean the whole structure towards proportionality.
A NAV-based regime replaces the full-scope split
The headline change sits in CP26/28, “The UK AIFM Regime”. At present, managers are sorted into “full-scope” and “sub-threshold” (or small) AIFMs, a binary inherited from the directive that many in the industry regard as a cliff edge. The FCA proposes to scrap that split and replace it with three size bands measured by net asset value rather than assets under management: Small, for firms up to £750m in NAV; Medium, from £750m to £5bn; and Large, above £5bn. Obligations would scale with the band, so a boutique credit manager and a global alternatives house would no longer face the same fixed threshold test.
Moving the yardstick from AUM to NAV is more than a drafting tweak. It changes which firms sit where, particularly for leveraged and private-market strategies where gross assets and net value can diverge sharply. Managers close to the current threshold will want to model where they land under the new bands before the 14 October deadline, because the category will drive everything from capital to reporting.
FRAME promises a £128m annual saving
CP26/26, the Fund Reporting for Asset Management Entities framework, is where the FCA has attached its most eye-catching number. The regulator estimates the reporting reforms will save the asset-management industry around £128m a year, and it has trailed the package under the banner of a “streamlined rulebook”. FRAME would retire the granular data fields that date back to the 2013 directive and replace them with consolidated datasets designed to track wider market risk rather than to collect line-by-line detail that supervisors rarely use.
For operations and compliance teams this is the reform with the most immediate day-to-day effect. The AIFMD reporting templates have been a standing cost since transposition, and firms running private-market funds have long argued that the fields were built for a different kind of portfolio. FRAME is the FCA’s answer, and responses are due by 22 September, the middle deadline of the three.
Remuneration reform lands first
The paper with the earliest deadline is CP26/27 on remuneration. It covers solo-regulated firms, including full-scope AIFMs, UCITS management companies and non-SNI MIFIDPRU investment firms, and proposes to simplify the pay rules those firms apply. Because it closes on 16 September, it is the first of the three to demand a firm response, even though it is arguably the narrowest in scope.
The sequencing matters. Managers that treat the package as a single October project risk missing the remuneration window by a month. Trade bodies are likely to want a co-ordinated response across all three papers, and that argues for starting now rather than waiting for the headline AIFM consultation to concentrate minds.
Divergence, on the FCA’s terms
The strategic point behind the package is divergence. Since Brexit the UK has kept the substance of AIFMD largely intact while promising to tailor it, and this is the moment the tailoring becomes concrete. The EU has been moving in its own direction with AIFMD II, so the UK regime and the bloc’s are set to drift apart on thresholds, reporting and pay. For managers that market funds on both sides of the Channel, the reforms raise the prospect of running two rulebooks rather than one, and the consultation responses are where firms can argue for that gap to be kept manageable.
The FCA has framed the whole exercise as cutting cost and complexity without lowering standards, and the £128m figure is central to that pitch. Whether the final rules deliver it will depend on the detail that emerges after the windows close.
What happens next
None of this is settled. These are consultations, not final rules, and the FCA has said it expects to publish a policy statement with final rules in the first half of 2027, with implementation targeted for 2028. That leaves a long runway, but the decisions that shape the regime are being taken now, in the responses the FCA receives over the next two months.
For UK managers the near-term task is calendar management: 16 September for remuneration, 22 September for FRAME, 14 October for the AIFM regime and the linked prudential discussion. The bigger question, whether a NAV-based, proportionality-led rulebook makes the UK a more attractive base for alternatives than a diverging EU, will not be answered until 2028. The first move, though, is on the table, and the response windows are open.
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