UK asset management reform – it’s here!

HM Treasury and the FCA have unveiled long-awaited proposals to overhaul the UK asset management regulatory framework. The proposals are framed around modernisation, simplification, flexibility and proportionality, while maintaining appropriate standards and safeguards.

The package includes both legislative changes and a rewrite of parts of the FCA Handbook, with the aim of creating a more tailored UK regime for asset managers.

Some of the key developments include:

• A new UK AIFM regime (draft Statutory Instrument - The Alternative Investment Fund Managers Regulations 2026) – The existing UK AIFM framework will be replaced by the Alternative Investment Fund Managers Regulations 2026, giving the FCA considerably greater power to set detailed firm-facing requirements through its rules. Paragraph 4.7 of the Policy Note for the draft SI summarises the changes.
• A new ALTS sourcebook (CP26/28 - The UK AIFM Regime) – The FCA intends to create a new sourcebook, Alternative Investment Funds (ALTS), for managers of unauthorised funds, and revoke the FUND sourcebook.
• A revised approach to AIFM categorisation (also covered in CP26/28) – The current distinction between sub-threshold and full-scope AIFMs is set to be replaced with a new three-tier model, using the simpler NAV calculation of size, designed to be more proportionate to a firm's size and activities.
• A consolidated remuneration framework (CP 26/27 - Remuneration: Solo-regulated firms’ rules reform) – The FCA is proposing a single, consolidated new remuneration code covering AIFMs, UCITS management companies and MIFIDPRU investment firms. This is based on a more proportionate, outcomes-focused remuneration regime and will simplify a complex area of regulation.  
• Changes to fund reporting (CP26/26 - Fund Reporting for Asset Management Entities (FRAME)) – The FCA is consulting on a new reporting regime calibrated to the type, size and activity of the fund, and which is intended to improve the quality, consistency and usefulness of data collected from firms.  The FCA notes that its proposals for a single reporting framework would reduce the reporting burden across the fund management population by 75%.

Next steps

The consultations run until September and October 2026, with further FCA consultation on the AIFM reforms expected before the final rules are settled.

The FCA’s remuneration policy statement is expected to be published in Q1 2027, with the new remuneration rules and guidance coming into force the day after publication (except for AIFMs, where a two-staged application is anticipated based on the wider AIFMD reforms).

Regarding the AIFM reforms, the FCA aims to publish a final policy statement and final Handbook rules in line with the Treasury’s finalised SI in 2027. The Treasury’s legislation and the new FCA rules will come into force at the same time. The FCA is also expecting to publish their policy statement on the asset management reporting regime in the first half of 2027.

Although implementation of the AIFM reforms and new reporting regime is not anticipated until 2028, firms may wish to start considering the potential impact now, particularly regarding governance, remuneration structures, reporting processes and regulatory categorisation.

The FCA has also announced a prudential roundtable in September as part of its wider review of the prudential framework for fund managers, which may provide useful indications of the direction of travel. You can email the FCA to register your interest.

We are already working our way through the detail of the proposals. If you would like to discuss the changes or their potential implications for your firm, please get in touch.

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