On 7 April 2025 HM Treasury published its consultation paper “Regulations for Alternative Investment Fund Managers” and the Financial Conduct Authority (“FCA”) published the “Call for input: Future regulation of alternative fund managers”. These set out proposed changes to the rules applying to alternative investment fund managers established in the UK (“UK AIFMs”). 

Together the Consultation and the Call for Input set out a range of interconnected proposals to: 

• Amend the enabling legislation to allow the FCA to determine appropriate and proportionate new rules based on a UK AIFM’s size, business model and risks; 

• Create a single regulatory regime for all UK AIFMs; 

• Change the methodology for calculating the size of an AIF for the purpose of categorising UK AIFMs; 

• Make the new regime apply proportionately by implementing three categories of AIFM based on size; 

• Signal changed FCA expectations for firms managing highly leveraged AIFs; 

• Make it easier to move between the different categories of AIFMs;  

• Amend the requirements on external valuation; and 

• Consider amendments to the rules for remuneration, prudential requirements, business restrictions, disclosure, reporting and marketing. 

The Call for Input contains examples of rule changes that the FCA may consider making. 

All UK AIFMs will be subject to a single regime. This will be in place of the current sub-threshold and above-threshold model which has not been reviewed since the AIFMD was transposed into UK law.

The FCA also wants to set new thresholds for categorising UK AIFMs. The current methodology for calculating their size uses assets under management, with adjustments where leverage is employed. This will change to the net asset value (“NAV”) of the AIFs they manage. This is likely to significantly reduce the number of firms which must implement the full rules. 

A significant feature of the proposed new regime is the plan to categorise UK AIFMs into three tiers, determined by reference to the NAV of their AIFs, as follows:  

• “large” UK AIFMs would be those with NAV over £5 billion.  These UK AIFMs will be subject to requirements similar to the present “full-scope” regime but with some of the current requirements, for example on disclosure and reporting, removed or modified; 

• “mid-sized” UK AIFMs would be those with NAV over £100 million up to £5 billion These UK AIFMs will be subject to the same standards as larger firms but with more flexibility. This will involve the removal of some of the detailed procedural requirements currently in the onshored Level 2 text unless retention is justified; and 

• “small” UK AIFMs would be those with NAV up to £100 million.  These UK AIFMs will be subject to a set of baseline standard to be determined through future consultations. 

There are also proposed changes to make it easier to move between different categories of AIFM, consider if further clarity is needed on expectations for highly leveraged firms and amend the requirements on external valuation. Remuneration, prudential requirements, disclosure, reporting and marketing are also under review, as are business restrictions.

AIMA has published a summary of the proposals

AIMA summary of the UK alternative investment fund managers regime .pdf

. We are also running a webinar with Macfarlanes on 29 April 2025 to discuss the issues raised.

Please contact Jennifer Wood or James Hopegood with any questions.

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  Jennifer Wood

  Managing Director, Global Head of Asset Management Regulation & Sound Practices

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  James Hopegood

  Director, Asset Management Regulation, AIMA