12 Oktober 2023 Raza Naeem Financial Regulation - Investment Funds

FCA speech discusses updating and improving the UK asset management regime

The FCA has published a speech by Ashley Alder, FCA Chair, delivered at the Investment Association’s Annual Dinner on 11 October 2023. Points of interest from the speech are set out below.

Mr Alder states that following the FCA’s asset management discussion paper from May 2023, it will be pursuing three main priorities for reform:

1. UK AIFMD - Making the regime for alternative fund managers more proportionate
  • The FCA will work with the Treasury to explore how to make regulation work better for small registered, small authorised and full scope managers.
  • Respondents to the DP highlighted that AIFMD prevents full-scope AFMs from carrying out other activities within the same legal entity. The FCA are considering modifications in this area.
  • The FCA is considering if changes could be made to ease some of the reporting requirements, such as the requirement to report to regulators when a fund is newly established, when there are any material changes to a fund, when there’s an acquisition or disposal of major holdings and in relation to the control of non-listed companies.
  • The FCA will be consulting on amending AIFMD and re-evaluating the AIFMD rules for non-UCITS retail funds next year, and will review the regulatory reporting regime in 2025.
2. Updating the regime for retail funds
  • The FCA considered feedback about the way in which some funds are regulated like alternative investment funds, where in principle only retail rules should apply. This points to a far clearer distinction between the requirements the FCA applies to managers of authorised retail funds and managers of AIFs. The result should simplify the retail rules for UCITS funds.
  • There was also feedback on whether non-UCITS funds might be rebranded to help rationalise the regime, and if so, how best to do this. The FCA will continue to explore this option, and welcome further dialogue on branding options.
3. Supporting technological innovation
  • Technology Working Group will publish its blueprint for fund tokenisation later this year.
  • The FCA is working on other initiatives, including the Direct2Fund proposals to make the UK fund dealing model and interactions with investors more efficient.

The speech published on 12 October 2023 is available here.