FCA to Replace EU Rules with UK-Specific Regulations for the £12 Trillion Asset Management Sector

2025-04-07T21:42:50.260+02:00

Monday, 07/04/2025 | 19:42 GMT by
Jared Kirui

These reforms are part of a wider effort to simplify market rules while maintaining strong risk management and consumer protection.
The FCA plans to adjust the Alternative Investment Fund Managers Directive (AIFMD) to better align with UK market needs.

The UK’s Financial Conduct Authority (FCA) proposed
new amendments to regulations aimed at supporting the growth and global
competitiveness of alternative asset managers.

This reform comes as part of a broader push to
streamline market rules, making it easier for firms to operate internationally
while ensuring effective risk management and consumer protection.

Streamlining Rules for UK Asset Managers

The FCA’s proposed regulatory reforms are expected to enhance the operations of UK asset managers, who collectively
manage trillions of pounds in assets. With private markets tripling in size
over the past decade, asset managers’ role in fueling the UK economy’s
financial health has never been more critical.

UK asset managers currently oversee £12.3 trillion in
mainstream investments and another £2 trillion in alternative assets. The FCA
sees this scale and the tripling of private markets in the past decade as strong reasons to modernize outdated rules.

However, the current regulatory environment, much of
which stems from EU legislation, has been seen as a barrier to the growth and
agility of UK firms, according to the regulator.

In particular, much of the alternative investment
sector has been governed by the Alternative Investment Fund Managers Directive
(AIFMD), a set of rules that the FCA plans to adjust to better serve UK firms.

Simon Walls, interim executive director of markets at
the FCA, emphasized that the regulator’s goal is to develop a more streamlined,
proportionate set of rules tailored specifically to UK investment managers.

“We want rules better tailored to UK investment
managers. These could allow them to operate more efficiently, further
supporting competition, competitiveness, and economic growth,” Walls said

“It’s part of our wider work to streamline the
regulatory regime for asset managers, to support the continued competitiveness
of our world-leading financial services as outlined in our new strategy.”

Post-Brexit Regulatory Adjustments

In collaboration with the UK Treasury, the FCA is also
considering replacing outdated EU-facing provisions with new, more relevant
rules. These adjustments will likely help asset managers navigate global
markets more efficiently, especially as the UK seeks to differentiate
itself from EU regulations post-Brexit.

The FCA
is actively seeking feedback on the proposals, with a deadline for responses
set for June 9, 2025. Following this consultation, the FCA plans to introduce
more detailed rules by mid-2026, subject to feedback and Treasury decisions.

The FCA’s move is part of a broader strategy published
on March 25, 2025, which includes over 50 actions aimed at fostering economic
growth and ensuring that the UK financial sector remains competitive.

The UK’s Financial Conduct Authority (FCA) proposed
new amendments to regulations aimed at supporting the growth and global
competitiveness of alternative asset managers.

This reform comes as part of a broader push to
streamline market rules, making it easier for firms to operate internationally
while ensuring effective risk management and consumer protection.

Streamlining Rules for UK Asset Managers

However, the current regulatory environment, much of
which stems from EU legislation, has been seen as a barrier to the growth and
agility of UK firms, according to the regulator.

“We want rules better tailored to UK investment
managers. These could allow them to operate more efficiently, further
supporting competition, competitiveness, and economic growth,” Walls said