The Financial Conduct Authority (FCA) and Treasury have proposed reforms to regulations for alternative investment fund managers (AIFM).

Their new regime aims to be more streamlined and proportionate to make it easier for firms to operate globally, while encouraging efficient risk management.

The FCA noted that much of the UK’s asset management regulation is derived from EU legislation, including the alternative investment fund managers directive (AIFMD).

The government is therefore consulting on amending the regulations that apply to managers of alternative investment funds.

It proposed simplifying the regulatory framework for AIFMs while retaining core consumer and market protections.

The government’s consultation focuses on the regulatory framework for AIFMs, covering topics such as which AIFMs should be subject to the regulations, and whether any changes are needed to key provisions due to be retained in legislation.

Alongside this, the government is consulting on removing detailed, firm-facing requirements from legislation, in line with the UK’s model for financial services regulation.

This will enable the FCA to create a “more proportionate and streamlined” regime for alternative fund managers.

Where appropriate, the FCA will replace these legal provisions within its rules, and it is also considering changes to its existing AIFMD rules.

Furthermore, the FCA and Treasury were considering bespoke regimes for investment trusts and venture capital firms.

“We want rules better tailored to UK investment managers,” commented FCA interim executive director of markets, Simon Walls.

“These could allow them to operate more efficiently, further supporting competition, competitiveness and economic growth.

“It’s part of our wider work to streamline the regulatory regime for asset managers, to support the continued competitiveness of our world-leading financial services as outlined in our new strategy.”

Investment Association chief executive, Chris Cummings, added: "The UK is a world-leading centre for investment management, and we welcome the opportunity to work with policymakers and regulators to streamline the regulatory regime for investment managers to create a more proportionate and competitive regulatory framework.

“The AIFMD is integral to a range of funds used by both institutional and retail investors, with alternative investment funds playing an important role in the growth of private markets.

“The proposals will allow the UK investment management industry to better serve its customers in the UK and around the world, to deploy capital effectively to support growth and to make a broader contribution to the UK economy.”

Both the government’s consultation and FCA’s call for input close on 9 June 2025.

The FCA said it planned to consult on detailed rules in the first half of 2026, subject to feedback and to decisions by the Treasury on the future regime.

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