CP26/28: The UK AIFM Regime

Read CP26/28 (PDF)

Why we are consulting

UK asset managers oversee almost £2 trillion in alternative assets, and over £16 trillion in total assets under management, making the UK the second largest market in the world. We're consulting on proposals to reform the regulatory framework for alternative investment fund managers (AIFMs) – the firms that manage alternative investment funds (AIFs) such as hedge funds, private equity funds and real asset funds. 

We want to protect consumers and safeguard market integrity while making our rules more proportionate to firms' size and activities. Our proposals aim to remove unnecessary complexity and administrative burden, support firms to grow and compete internationally, and maintain high standards where they matter most.

Who this is for

This consultation is relevant to: 

• UK-authorised AIFMs and UK-registered AIFMs. 
• Firms marketing alternative investment funds in the UK. 
• Residual collective investment scheme (CIS) operators. 
• Depositaries, prime brokers and delegates of AIFMs. 
• Firms considering entering the UK alternative investment market. 
• Trade bodies and industry associations representing asset managers. 
• Investors in alternative investment funds, including professional and retail investors. 
• UCITS Management Companies (in relation to the discussion chapter on prudential reforms for asset managers).

Next steps

Online response form

Respond to this consultation by 14 October 2026 via our online response form, or by email. We invite responses on the enclosed discussion chapters by 18 September 2026, except for the discussion chapter on prudential reforms which also closes on 14 October 2026.

We'll review all responses and publish a policy statement setting out our final rules. We also intend to publish a second consultation paper with draft rules on remaining areas of the AIFM regime, including areas covered by discussion chapters in CP26/28.

The Treasury is running a parallel consultation on changes to the underlying legislation. The implementation date currently envisaged for the new regime is 2028. 

We have published two consultations alongside this one that are relevant to the AIFM regime: CP26/26: Fund Reporting for Asset Management Entities (FRAME), and CP26/27: Remuneration: Solo-regulated firms’ rules reform.

Prudential Roundtable – September 2026

As part of our engagement on reviewing the prudential regime for Fund Managers, we plan to host a roundtable in September 2026. To register your interest, please email us. You’re also welcome to submit potential questions for discussion at the event.

Background

Much of the current UK framework for AIFMs is derived from EU law, specifically the Alternative Investment Fund Managers Directive (AIFMD), which was retained in UK law after the UK left the EU. The framework has become complex, with requirements spread across legislation, Treasury regulations and FCA rules.

Requirements have become dated – for instance, firm size thresholds have not reflected inflation or growth in the market. Some rules do not sufficiently distinguish between AIFMs doing different business, such as funds frequently trading financial instruments on markets and funds holding illiquid investments over a longer term. Our aim is to make the rules more proportionate to firms’ size and activities, and to better match the rules to firms’ risks.

Our proposals update the size thresholds and introduce a new 3-tier structure – small, medium and large – with a graduated application of the rules, replacing the current approach. Greater flexibility should help firms compete, innovate, and do cross-border business.

We propose a new sourcebook, the Alternative Investment Funds sourcebook (ALTS), to bring most AIFM rules together in one place. This will make the regime easier for firms to enter and navigate, and quicker for us to update in future.

We have engaged extensively with industry on reform. This consultation builds on our earlier Discussion Paper and Call for Input, as well as roundtables and bilateral meetings with firms and trade bodies. It sets out draft rules and asks for feedback on specific policy questions.

We're also publishing, alongside this paper, a separate consultation on Fund Reporting for Asset Management Entities (FRAME), which proposes improved and simplified reporting requirements for fund managers, and a consultation on reforming the remuneration code for asset managers.

This work supports our commitment to a regulatory framework that promotes growth and international competitiveness while protecting consumers and market integrity.