The UK’s Financial Conduct Authority (FCA) has proposed changes to its regulatory framework for alternative asset managers.
These proposed changes aim to facilitate market entry, promote growth, enhance competition, and encourage innovation within the sector.
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The new regime is set to be “more streamlined and proportionate”, to aid firms’ operations on a global scale while maintaining effective risk management practices.
Currently, UK asset managers oversee £12.3tn in mainstream assets and £2tn in alternative assets, with private markets having expanded threefold over the last decade.
Much of the existing regulatory framework is derived from EU legislation, particularly the Alternative Investment Fund Managers Directive (AIFMD).
The UK Government is consulting on the repeal of certain AIFMD requirements, with the FCA considering the introduction of new rules to replace these provisions where necessary.
FCA markets interim executive director Simon Walls 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.
“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.”
In conjunction with the Treasury, the FCA is exploring the possibility of establishing tailored regulatory frameworks for investment trusts and venture capital firms, recognising the unique characteristics of these sectors.
The FCA is inviting feedback on the proposed reforms until 9 June 2025 and plans to consult on detailed regulations in the first half of 2026, contingent on stakeholder input and Treasury decisions regarding the future regulatory landscape.
