FCA Consults On Fund Manager Regime Overhaul

Quite some time after HM Treasury proposed significant changes to alternative fund manager regulation, it has produced draft legislation to make the changes and the FCA is now consulting on a new, updated and more proportionate prudential supervisory regime for alternative investment fund managers. The change is long overdue, as the UK framework currently in place largely stems from EU requirements, some of which were never popular. Now they are outdated anyway, and the UK has the opportunity to create a clearer and more proportionate regime.

What's the plan?

Broadly, there will now be three tiers of AIFM, and a graduated, more flexible application of FCA Rules. It follows the Government and regulators' strategy of providing the right degree of consumer protection and market integrity, while recognising that there are firms that do not present high levels of risk and therefore can benefit from less onerous regulation than higher risk ones.