The Financial Conduct Authority (FCA) has proposed reforms to its regime for alternative asset managers, aiming to make it easier for firms to enter the UK market, grow, compete and innovate.
The planned changes are part of a broader move to create a more streamlined and proportionate regulatory framework.
The FCA says this will support UK firms in operating more efficiently at a global level, while maintaining effective risk management and ensuring consumer protection.
Asset managers play a vital role in the UK economy, managing £12.3trn in mainstream assets and £2trn in alternative assets.
In addition, private markets have grown significantly in recent years, tripling in size over the past decade.
Much of the current UK regulatory framework stems from EU legislation, particularly the Alternative Investment Fund Managers Directive (AIFMD).
The government is consulting on repealing AIFMD’s firm-facing requirements and, where appropriate, the FCA will replace these with new rules.
It is also reviewing its existing AIFMD rules.
Simon Walls, interim executive director of markets at the FCA, said: “We want rules better tailored to UK investment managers. These could allow them to operate more efficiently, further supporting competition, competitiveness and economic growth.”
The regulator is also working with the Treasury on potentially creating bespoke regulatory regimes for investment trusts and venture capital firms, recognising their specific characteristics.
The FCA is inviting comments on the proposals before 9 June 2025 and expects to consult on more detailed rules in the first half of 2026, depending on feedback and decisions from the Treasury.
The proposals form part of the FCA’s strategy, published on 25 March, which includes nearly 50 actions aimed at supporting economic growth and the international competitiveness of UK financial services.
Commenting on the news, Pippa Tasker, a financial services partner with law firm CMS, said: “The recognition that the current rules may not be appropriate for listed investment companies is welcome news, but the consultation also suggests an increase in the regulatory burden for smaller managers and property fund managers.
“So, not quite the slashing of red tape we were promised.”
