UK FCA consults on UK regime for AIFMs

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/28, amongst a package of consultations on modernising the UK asset management regulatory framework. The consultation should be read alongside HM Treasury's (HMT) proposed reforms to the legislative framework for alternative investment fund managers (AIFMs), set out in a policy note and the draft statutory instrument (SI) published for technical comment.

Most firm-facing requirements inherited from the EU framework will move from legislation and be transferred to the FCA's rulebook. The FCA's consultation sets out the rules and changes it proposes to introduce in the following areas:

• A new three-tier regime for AIFMs, with requirements calibrated by firm size using net asset value thresholds of GBP750 million and GBP5 billion, replacing the current legislative thresholds.
• Simplification of the regime by removing or reducing detailed, prescriptive requirements inherited from the Alternative Investment Fund Managers Directive, producing a more proportionate framework.
• A clarified scope of regulation and authorisation.
• A new FCA sourcebook titled the "Alternative Investment Funds sourcebook" for managers of unauthorised funds.
• Changes to valuation, leverage, risk management, liquidity management, delegation, investor disclosure and cross-border marketing requirements.

The consultation also includes discussion chapters on depositaries, prime brokers, the business restriction and the prudential regime for AIFMs. Feedback on the discussion chapters is due by 18 September, while feedback on all other consultation proposals, together with the discussion chapter on the prudential regime, is due by 14 October. The FCA intends to publish a policy statement in 2027 and will implement its rules in 2028.

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