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FCA and Treasury publish landmark consultation on AIFMD rules - Portfolio Adviser

Reported by Portfolio-adviser
Jul 14, 2026· 3 min read
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Key Takeaways
  • • HM Treasury and the FCA jointly launched a consultation on 7 April 2025 to reform the UK regulatory framework for Alternative Investment Fund Managers (AIFMs), with formal rule proposals expected in the first half of 2026.
  • • The proposed reforms prioritize deregulation and simplification of the AIFM regulatory perimeter, threshold conditions, and notification requirements—representing a divergence from the EU's more stringent AIFMD II framework taking effect in April 2026.
  • • The consultation closing date was 9 June 2025; following stakeholder feedback review, HM Treasury will publish a draft statutory instrument and the FCA will issue detailed proposed rules in H1 2026.
  • • The reform initiative is framed as part of the UK government's post-Brexit economic growth agenda, leveraging regulatory flexibility to create a more business-friendly regime relative to retained EU-derived rules.
  • • Key consultation topics include redefining the regulatory perimeter for AIFMs, establishing clearer threshold conditions for regulatory applicability, and streamlining AIFM notification requirements.
Summary
On 7 April 2025, the UK government initiated a landmark regulatory overhaul through concurrent consultations by HM Treasury and the Financial Conduct Authority targeting the Alternative Investment Fund Managers regulatory regime. HM Treasury published an open consultation while the FCA released a complementary "Call for Input," both designed to modernize rules governing AIFMs operating in the United Kingdom. This dual-track approach signals coordinated effort between the Treasury and the financial regulator to reshape the regulatory landscape for alternative asset managers.

The current UK AIFM regulatory framework derives from the European Union's Alternative Investment Fund Managers Directive (AIFMD) and was retained following Brexit. The proposed reforms represent a meaningful strategic divergence from the EU's direction. While the European Union enacted substantial legislative upgrades to AIFMD (AIFMD II) in April 2024, effective from April 2026, the UK consultation emphasizes deregulation and operational simplification rather than enhanced regulatory requirements. The UK government explicitly frames these changes as a "Brexit dividend," utilizing post-departure regulatory flexibility to create a regime better tailored to market participants and competitive with international jurisdictions.

The consultation addresses three primary areas: the regulatory perimeter defining which entities qualify as AIFMs subject to rules, threshold conditions determining when specific regulations apply to an AIFM, and notification requirements for fund managers. By narrowing scope and streamlining administrative obligations, the proposed framework aims to reduce compliance burdens while maintaining core consumer protection standards. The consultation period concluded on 9 June 2025. Following Treasury and FCA review of stakeholder submissions, both regulators plan to publish detailed rule proposals in the first half of 2026—HM Treasury through a draft statutory instrument and the FCA through formal proposed rules. This timeline positions the UK rules for implementation ahead of or concurrent with AIFMD II's April 2026 effective date, allowing UK-domiciled managers to navigate a distinct regulatory regime independent of European requirements.

The consultation reflects broader UK policy objectives centered on removing regulatory friction to support economic growth and strengthen London's competitiveness as a global financial center. Alternative asset managers, industry associations, and institutional investors have engaged substantively in this consultation process, with responses shaping the final rule design that regulators will propose in mid-2026.

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Portfolio-adviser FCA and Treasury publish landmark consultation on AIFMD rules - Portfolio Adviser