The proposed changes aim to simplify the current system and align it more closely with the domestic market, potentially replacing several provisions inherited from European Union law.
A key focus of the reforms is the repeal of firm-level obligations contained in the EU’s Alternative Investment Fund Managers Directive (AIFMD). The UK government is currently consulting on this legislative shift, and the FCA is reviewing whether elements of these regulations should be retained, modified, or removed entirely from its rulebook.
In parallel, the regulator is evaluating adjustments to its existing AIFMD-related rules, while also exploring the development of customised frameworks for investment trusts and venture capital firms. These considerations come from the distinct operational models within those sectors.
FCA officials noted that the aim of the initiative is to better adapt rules to the needs of UK-based managers, allowing for more efficient operations and supporting a more competitive and innovative market. The changes are also expected to improve firms’ ability to engage globally, while maintaining appropriate safeguards for investors and upholding overall market integrity.
Asset managers play a central role in the UK’s financial ecosystem. The sector oversees GBP 12.3 trillion in mainstream investments and an additional GBP 2 trillion in alternative assets. Private markets alone have expanded threefold over the past ten years, reinforcing the significance of effective regulation for the industry’s future direction.
The FCA’s proposed reform is part of a regulatory strategy introduced in March 2025, which includes commitments to reduce complexity and support economic growth. As part of this agenda, the regulator outlined nearly 50 actions in a letter to the Prime Minister, focusing on maintaining the UK’s status as a leading financial centre.
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