The Financial Conduct Authority (FCA) is preparing to overhaul the regulations that govern the UK’s asset management industry, a move aimed at cutting through red tape and enhancing global competitiveness in the wake of Brexit.
This transformation is set to replace elements of the EU’s Alternative Investment Fund Managers Directive (AIFMD) with a new framework more closely aligned with the specific needs of the UK market. The planned changes are part of a broader initiative to make financial regulations simpler, more effective, and better suited to modern-day challenges.
Enhancing Competitiveness and Reducing Complexity
The FCA’s proposed reforms come at a time when the UK’s asset management sector is more vital than ever, with firms managing approximately £12.3 trillion in mainstream assets and an additional £2 trillion in alternative investments. As private markets have tripled in size over the last decade, the need for a responsive and efficient regulatory environment has become increasingly clear.
According to the FCA, many of the current rules are still heavily influenced by legacy EU legislation, which can hinder the ability of UK firms to innovate and compete on the global stage. By moving toward a UK-specific rulebook, the FCA aims to reduce regulatory friction and unlock new opportunities for firms across the sector.
Simon Walls, the FCA’s interim executive director of markets, highlighted the intention to deliver more focused, proportionate regulations:
“We’re working on a set of rules that are more suited to UK investment managers. This will allow them to function more efficiently and contribute to economic growth and competition,” Walls stated.
A New Regulatory Era for UK Asset Managers
The reforms are not just about regulatory efficiency they also play a key role in supporting the UK’s broader financial strategy in a post-Brexit world. In partnership with the Treasury, the FCA is developing proposals to phase out outdated EU-based frameworks and replace them with more relevant domestic regulations.
This effort is part of the UK’s strategic vision, outlined in a roadmap published on March 25, 2025, which includes over 50 planned actions to reinforce the strength and adaptability of the financial sector. These upcoming changes are designed to help asset managers compete more effectively on a global scale while maintaining robust risk oversight and strong consumer safeguards.
What Happens Next?
The FCA is inviting feedback from industry stakeholders, with consultations open until June 9, 2025. Based on this input and further collaboration with the Treasury, the regulator expects to introduce finalized rules by mid-2026.
As the UK charts its own regulatory course, these reforms could mark a pivotal shift in how investment managers operate offering greater flexibility, reduced compliance burdens, and a clearer path to long-term growth.
