The proposed new UK AIFM regime would replace the AIFMD rules the UK inherited from the EU with a domestic regime for alternative investment fund managers that scales with firm size. The FCA set out its proposals in CP26/28 on 14 July 2026, alongside the Treasury’s draft AIFM Regulations, and although this is a consultation rather than law, it would redraw who is in scope, what managers tell investors and how annual reports are put together.
What’s being proposed for the UK AIFM regime?
The Treasury would move most of the detail out of legislation and into FCA rules, which the FCA would gather in a new sourcebook for managers of unauthorised funds, the Alternative Investment Funds sourcebook (ALTS). The FCA’s stated aim is rules that are clearer, better aligned to firms’ size and activities, and lighter for smaller firms that are less likely to affect market integrity.
The reform also sits inside a bigger package, because on the same day the FCA published FRAME (CP26/26), its proposals for a single fund reporting framework, and a remuneration consultation (CP26/27). The Treasury will revoke the AIFMD reporting requirements, and FRAME is where the FCA proposes their simplified replacement.
What would change?
The starting point is a new way of sizing firms. Managers would be classed as small, medium or large on the aggregate net asset value of the AIFs they manage, replacing today’s leverage-based measure and the €100 million and €500 million thresholds. After feedback to its 2025 Call for Input, the FCA has raised the small-to-medium threshold from the £100 million it first floated to £750 million, while large means above £5 billion.
The cliff edges between tiers would also be softer. A firm that crosses a threshold would notify the FCA rather than apply for a variation of permission, and it would get six months to meet its new obligations, or 12 months where it newly needs a depositary.
The registration regime would go too, as the Treasury proposes removing the registered AIFM category except for managers of registered venture capital and social entrepreneurship funds. That means most small registered managers would need full FCA authorisation, with no grandfathering. Internally managed listed closed-ended investment companies below the current small-manager threshold would be exempt from the regime.
The proposals then turn to what managers tell investors and how they report:
- Professional investor disclosures: today’s list of pre-contractual disclosures would give way to a high-level, principles-based rule to disclose what investors need to assess the merits, risks and costs of the fund. Some mandatory items stay, including valuation and liquidity risk management, and a new rule would require managers to meet investors’ reasonable requests for information. The requirement to disclose historical performance to professional investors would go, though anything shown must still be accurate, clear, fair and not misleading.
- Liquidity and leverage: instead of ongoing disclosure, liquidity and leverage arrangements would be disclosed upfront, before investment, and updated on a material change. Firms could choose their leverage calculation method provided they explain it, and activating gates or side pockets, or suspending redemptions, would trigger information to investors “as soon as reasonably practicable” rather than “immediately”.
- Retail disclosures: for unauthorised AIFs sold to retail investors, the FCA would keep a fuller, prescriptive set of mandatory pre-contractual disclosures and periodic statements, at least every six months, moved from COBS into ALTS. These would sit alongside the CCI product summary, which applies in full from 8 June 2027, and could be linked from it.
- Annual reports: medium and large managers would produce an audited annual report for each unauthorised AIF, keeping the principles of the current Level 2 content rules rather than every detail, while remuneration disclosure would narrow to the total paid to material risk-takers. Small managers would provide a lighter, unaudited annual summary, and authorised funds, recognised schemes and listed closed-ended funds fall outside these rules.
What it means in practice
The headline is less prescription, but the detail cuts both ways. Firms moving from registered to authorised status take on a full regime, and small managers that send investors nothing formal today would owe them an annual summary. Principles-based disclosure also means that the manager, rather than a checklist, decides what investors need, and the manager has to be able to show why.
There’s a second effect to plan for, because once the UK rules are made they will diverge from AIFMD II, whose transposition date in the EU was 16 April 2026. A manager running UK and EU funds will need to keep two sets of disclosure and reporting logic in step.
The timeline
- 14 July 2026: CP26/28, the Treasury’s draft regulations and FRAME are published
- 18 September 2026: feedback is due on most discussion chapters (depositaries, prime brokers, removing the business restriction)
- 14 October 2026: the consultation closes, along with the Treasury’s consultation on the draft regulations and the prudential discussion chapter
- 2027: the FCA aims to publish final rules in line with the Treasury’s finalised statutory instrument
- 2028: the new AIFM regime and the reporting regime are intended to be implemented, with some rules possibly deleted sooner
What to do now
- Work out your tier by aggregating the NAV of every AIF you manage, as the FCA proposes, and seeing whether you land as small, medium or large.
- Read the disclosure chapters with your documents open, comparing your offering documents, investor reports and annual reports with the proposed professional and retail rules, and noting what could go and what you would have to add.
- Respond where the proposals affect you, since the thresholds, the annual summary for small firms and the implementation timeline are all open questions, and the FCA has asked directly how long firms need.
CP26/28 is the biggest rewrite of UK alternatives regulation since AIFMD arrived, and while it promises less paperwork for many firms, checking where you would land is the best way to find out what it means for yours.
For us, the UK AIFM reform is another case of the same fund facts being asked for in new shapes. Liquidity terms, leverage, valuation, fees and performance feed offering documents, investor reports, annual reports and, under FRAME, regulatory returns. When that data is governed in one place, with an audit trail behind each figure, a principles-based rule is easier to meet because you can show what you disclosed and why. If you’d like to talk it through, get in touch.
Sources: FCA CP26/28: The UK AIFM Regime, CP26/28 PDF, HM Treasury: Draft Regulations for Alternative Investment Fund Managers, policy note, as at 1 August 2026.
