FCA to reform investment management rules to improve competition

(Sharecast News) - The Financial Conduct Authority announced on Monday that it is looking at ways to make the investment management sector more innovative and competitive. The financial regulator said it is proposing reforms to its regime for alternative asset management to make it easier for new firms to enter the market and compete.

A more "streamlined and proportionate" regime will make it easier for firms to operate globally and encourage effective risk management, while ensuring that consumers remain protected, the FCA said.

UK asset managers, which manage a combined £12.3trn in mainstream assets and £2trn in alternative assets, are mostly governed by regulation that is derived from EU legislation, including the so-called alternative investment fund managers directive (AIFMD).

The government is now consulting on provisions that repeal AIFMD's firm-facing legislative requirements, the FCA said, and wants to create bespoke regimes for investment trusts and VC firms due to the different ways each sector operates.

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

"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."

The FCA is now inviting comments on the proposals, ending on 9 June, and will consult on detailed rules in the first half of 2026.