The government has launched a consultation on plans to amend the regulations applying to alternative investment funds in order to make it simpler and cheaper for most asset managers to do business in the UK, as part of its efforts to drive economic growth in the UK.

Much of the UK's current asset management regulation is derived from EU legislation, including the alternative investment fund managers directive (AIFMD).

However, the government has proposed simplifying the regulatory framework for alternative investment fund managers, while retaining core consumer and market protections.

In particular, the government is consulting on provisions that would repeal AIFMD’s firm-facing legislative requirements, in line with the UK’s established model for financial services regulation.

This is also intended to enable the Financial Conduct Authority (FCA) to create a more proportionate and streamlined regime for fund managers, ensuring rules are properly tailored to the nature and scale of a firm’s business.

In line with this, the FCA has launched a call for input, which outlined plans to create bespoke regimes for investment trusts and for venture capital firms due to those sectors’ distinct characteristics.

The FCA said that it is intending to consult on detailed rules in the first half of 2026, subject to feedback and to decisions by the Treasury on the future regime.

According to the FCA, the more streamlined and proportionate regime would make it easier for firms to operate globally, while encouraging effective risk management, whilst also upholding market integrity and confidence by making sure consumers are protected.

FCA interim executive director of markets, Simon Walls, said: "We want rules, better tailored to UK investment managers. These could allow them to operate more efficiently, further supporting competition, competitiveness and economic growth.

"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."

This latest work is also in line with the FCA's broader pledge to support UK growth, as outlined in its recent strategy.

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