The UK’s alternative investment fund regime is heading for its biggest shake-up since AIFMD was first transposed into domestic law in 2013, after the FCA and HM Treasury unveiled plans on 14 July 2026 to overhaul reporting requirements and firm classifications for AIFMs.
HM Treasury published a draft statutory instrument, the Alternative Investment Fund Managers Regulations 2026, alongside a policy note setting out its intentions, said Leo RegTech.
Leo RegTech recently discussed how the FCA just rewrote the rulebook for AIFMs, and for once, the firm claims it sees it as good news.
The FCA simultaneously released three consultation papers covering the AIFM regime, fund reporting, and remuneration, signalling a coordinated push to modernise rules largely inherited from EU legislation.
The FCA notes that UK asset managers oversee almost £2trn in alternative assets and more than £16trn in total assets under management, making Britain the second-largest asset management market globally.
The most significant proposal is a targeted 75% reduction in reporting burden, achieved largely by scrapping the AIFMD Annex IV return in favour of a new UK-built framework called FRAME (Fund Reporting for Asset Management Entities). Unlike Annex IV, FRAME is designed to scale with firm size rather than applying uniform requirements regardless of a manager’s assets under management.
Alongside this, the regulator is proposing to replace the current two-tier AIFM structure, full-scope and sub-threshold, with a three-tier system based on net asset value rather than assets under management.
Firms managing less than £750m in NAV would qualify as small AIFMs, a higher threshold than originally proposed, meaning more firms than expected are likely to fall into the lighter-touch category. Medium and large AIFMs above that line would face proportionately scaled obligations.
A further detail, tucked into the delegation section of CP26/28, proposes a new “additional core AIFM functions” category covering third-party valuation, compliance monitoring, and AIF marketing, which would become easier to delegate. Liability would remain with the AIFM and written agreements would still be required, but the change acknowledges that many smaller and mid-sized managers already outsource compliance oversight to hosting platforms.
None of the changes take effect immediately. The three consultations close between September and October 2026, with a final policy statement and Handbook rules expected in 2027 and full implementation pencilled in for 2028.
In the interim, firms are being encouraged to map their likely tier against the £750m threshold, begin comparing current Annex IV reporting against what is known of FRAME, and review delegation agreements covering compliance monitoring.
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