The FCA is proposing updates to its regulatory framework for alternative asset managers, aiming to simplify market entry and support firm growth, competition, and innovation.

The Financial Conduct Authority (FCA) has unveiled plans to reform its regime for alternative asset managers, with a focus on streamlining the rules to promote innovation and ease of entry, while maintaining strong consumer protection and market integrity.

The proposed changes aim to create a more proportionate framework that allows UK-based firms to compete more effectively on a global stage and manage risks responsibly. By doing so, the FCA hopes to reinforce confidence in UK markets and support the long-term growth of the asset management sector.

Asset managers play a vital role in both individual financial wellbeing and the wider UK economy. Currently, UK firms manage approximately £12.3 trillion in mainstream assets and £2 trillion in alternative assets. Notably, private markets have grown significantly—tripling in size over the past decade.

Much of the UK’s regulatory landscape for asset management stems from EU legislation, including the Alternative Investment Fund Managers Directive (AIFMD). The UK Government is now consulting on proposals to repeal certain firm-facing provisions under AIFMD. Where appropriate, the FCA will incorporate replacements into its own rulebook and is also reviewing existing AIFMD-related regulations for potential revision.

In partnership with HM Treasury, the FCA is also exploring the development of bespoke regulatory frameworks for sectors with unique characteristics, such as investment trusts and venture capital firms.

The FCA is inviting feedback on its proposals until 9 June 2025. A more detailed consultation on specific rule changes is expected in the first half of 2026, depending on industry input and final decisions from the Treasury.

This initiative is part of the FCA’s strategic commitment—published on 25 March—to foster economic growth by updating and refining the regulatory framework for asset managers. It is also one of nearly 50 actions outlined in a recent letter to the Prime Minister, reaffirming the FCA’s focus on supporting the competitiveness of the UK’s financial services sector.