The UK’s Financial Conduct Authority (FCA) has today, 14 July 2026, proposed a package of reforms designed to reduce costs and improve the quality of regulatory data for asset managers.
Simon Walls
According to the watchdog, the updated rules would be fit for today’s UK market, specifically “more flexible, tailored and proportionate, while maintaining clear standards, especially for firms serving retail clients”.
The effect is a projected saving of £128 million annually for firms – set to come primarily from simpler Fund Reporting for Asset Management Entities (FRAME) requirements.
Specifically, the watchdog is consulting on proposals to reform the regulatory framework for alternative investment fund managers (AIFMs), including hedge funds, private equity funds and real asset funds.
Simon Walls, executive director, markets, FCA, said: “By tailoring the regime for UK asset managers, we can collect better data while also saving industry 10s of millions of pounds a year. With a sharp focus on proportionality, we can particularly boost freedom for smaller firms to find new ways to achieve the same high standards.
“Together, the proposals are a practical example of the FCA’s strategy in action: becoming a smarter regulator, which is more efficient and effective, using proportionate data collection to better identify risk.”
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The suggested reform package would simplify rules related to the Alternative Investment Fund Managers Directive (AIFMD) from 2013 – which was retained from the EU following Brexit.
Since then, the framework has become complex and requirements are currently spread across legislation, Treasury regulations and FCA rules.
According to the FCA these requirements have become dated, with the watchdog highlighting aspects such as firm size thresholds which have not reflected inflation or growth in the market.
Additionally, the regulator has stated that “some rules do not sufficiently distinguish between AIFMs doing different business, such as funds frequently trading financial instruments on markets and funds holding illiquid investments over a longer term”.
In light of this, the FCA is aiming to make the rules more proportionate on the whole, to better match the rules to firms’ risks.
The proposals are to introduce a new 3-tier structure – small, medium and large – with a graduated application of the rules. Additionally, a new sourcebook has been suggested – the Alternative Investment Funds sourcebook (ALTS) in order to unite ‘most’ AIFM rules in one location.
The streamlined rulebook proposal follows the FCA’s previous ‘Discussion Paper and Call for Input’. Currently, the regulator is consulting on the proposals and inviting feedback before making final decisions – the deadline for responses is 14 October 2026.
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Moreover, the FCA is also publishing a separate consultation on Fund Reporting for Asset Management Entities (FRAME). This initiative proposes “improved and simplified reporting requirements for fund managers, and a consultation on reforming the remuneration code for asset managers”.