- within Insurance and Strategy topic(s)
On 14 July 2026, the Financial Conduct Authority (FCA) published CP26/28, launching a consultation on a wholesale redesign of the UK regime for alternative investment fund managers (AIFMs), alongside HM Treasury (HMT)’s parallel changes to the underlying legislation.
The changes and revisions proposed represent the most significant reform of the framework since the Alternative Investment Fund Managers Directive (AIFMD)was implemented in 2013. Much of the current regime is derived from retained EU law, and the reforms form part of the Government’s wider post-Brexit, post-Financial Services and Markets Act 2023 programme of moving firm-facing requirements out of legislation and into the FCA’s rules.
Notably, a key change is a shift from the current “full-scope” and “small” distinction, as the only two classes of AIFM, to a more proportionate three-tier structure based on net asset value. Firms managing less than £750 million net asset value (NAV) will be “small” AIFMs, those between £750 million and £5 billion will be “medium”, and those above £5 billion, “large”. The £750 million small-firm threshold is a marked increase on the £100 million originally proposed in a 2025 Call for Input on the future regulation of AIFMs, reflecting industry feedback that the earlier figure was too low and created cliff-edge effects. In terms of impact of the new thresholds, regulatory obligations scale up progressively across the tiers, and firms crossing a threshold must notify the FCA rather than seek a variation of permission. Transitional provisions will also be put in place to help ease the move for affected firms.
Most of the regime being consulted on will be consolidated into a new Alternative Investment Funds sourcebook in the FCA handbook (which will be known as “ALTS”, replacing the existing Investment Funds sourcebook, FUND), bringing rules currently spread across legislation, retained EU materials and the Handbook into a single source. The FCA notes that this is more than a re-structuring exercise: it makes the FCA the principal architect of the regime and future changes considerably quicker to implement.
Other proposals include the following:
- Mandatory dual calculations of fund leverage (using the gross method and commitment method) and the “substantially leveraged” trigger regime will be replaced by strategy-appropriate disclosure of leverage quantum.
- Valuation rules will now apply consistently across all AIFM sizes (including small AIFMs, which currently have no specific rules around valuation).
- Small AIFMs will have to produce an “annual summary” instead of a full annual report.
- Delegation of functions by the AIFM to third-parties will move to a post-notification model, and investor disclosures will be streamlined and split more clearly between professional and retail investors.
AIFMs would be well advised to model now where they fall under the NAV thresholds and how their authorisation, reporting and operating arrangements may need to adapt.
CP26/28 closes on 14 October 2026, with final rules expected to follow the HMT’s statutory instrument. Full implementation is currently anticipated in 2028.
CP26/28 and HMT’s policy paper are available here and here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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