Firms that manage, oversee, or advise on an alternative investment fund in the UK should take note of 14 July 2026 as an important day. Not because anything changed on the day itself, but because that’s when the FCA and HM Treasury told us, in plain terms, that the last decade of AIFMD paperwork is finally up for a rewrite.
We don’t say this often about regulatory reform, but this one is designed to make life easier for compliance teams, not harder.
Two changes matter most here, a sharp cut to reporting burden through a new UK-built framework, and a more proportionate, three-tier way of classifying firms by size. What follows sets out what each means in practice, and what’s worth doing about it before the year is out.
What actually happened
On 14 July 2026, HM Treasury published a draft statutory instrument, the Alternative Investment Fund Managers Regulations 2026, along with a policy note explaining the legislative changes it wants to make. On the same day, the FCA published three consultation papers covering the AIFM regime itself, fund reporting, and remuneration.
Three consultations in one day means one clear direction of travel and this shows that it isn’t a minor tidy-up. It is the biggest overhaul of the UK’s AIFM framework since AIFMD was first transposed into UK law in 2013, and much of the current regime has sat untouched since then, inherited from EU legislation the UK is no longer required to keep. The three consultations are due to close in September and October, with a final policy statement and Handbook rules expected in 2027, and the overall package coming into effect in 2028.
To put the scale of what’s at stake in context, the FCA notes that UK asset managers oversee almost £2 trillion in alternative assets and more than £16 trillion in total assets under management, making the UK the second-largest asset management market in the world. When a market of that size undergoes a regulatory rewrite, the effects are felt throughout the value chain, by fund managers, hosting platforms, and compliance consultancies alike.
Two main changes
The headline number: a 75% cut to reporting
The FCA is targeting an overall reduction in reporting burden of around 75%, largely by replacing the AIFMD Annex IV return with a new UK-specific framework, FRAME, or Fund Reporting for Asset Management Entities.
FRAME is not a rebrand of Annex IV. It is a distinct, UK-built reporting model, consulted on separately in CP26/26, designed to be proportionate to a firm’s size rather than requiring a £50 million manager to complete the same forms as a £5 billion one. For firms that have spent the last decade fitting Annex IV data into an ill-suited template each quarter, this is the FCA acknowledging that the exercise had become disproportionate to the risk it was managing.
Three tiers instead of two
The other structural change worth understanding is that AIFMs, currently split into two categories, full-scope and sub-threshold, will move to a three-tier structure based on the net asset value of the funds a firm manages, rather than the current assets-under-management test.
Firms managing less than £750 million in NAV would be classed as small AIFMs, a notably higher bar than the FCA originally proposed, meaning more firms are likely to land in the lighter-touch tier than expected. Firms above that threshold move into medium or large categories, each with obligations scaled accordingly. It is a more proportionate structure than a simple large/small split, and one that rewards firms that establish early which tier they are likely to sit in, rather than waiting to be told.
The line that matters most for firms that outsource compliance
Buried in the delegation section of CP26/28 is a detail that deserves more attention than it has had so far. The FCA is proposing a new narrower category, “additional core AIFM functions”, covering third-party valuation, compliance monitoring, and AIF marketing, which would become easier to delegate than under the current regime.
The regulator is explicitly naming compliance monitoring as a function it expects some firms to delegate, and is proposing to make that easier rather than harder. Liability remains with the AIFM regardless, and a written agreement is still required, so this is not a loosening of accountability. But it is a clear regulatory acknowledgement that many smaller and mid-sized managers already run compliance oversight through hosting platforms or outsourced arrangements, and that the FCA’s rules should reflect that reality.
For hosting platforms, compliance consultancies, and small-to-mid AIFMs weighing up whether to keep compliance monitoring in-house or delegate it, this consultation is a signal that the answer is not obvious, and is unlikely to become harder to justify going forward.
What to actually do this quarter
Giving feedback to the FCA should be the key priority at this point, but we also think that firms should start paying attention to what’s coming, without needing to treat it as urgent. A sensible starting point is to analysis thee following three points that can be done by Autumn:
- Work out your likely tier: Pull your fund NAV data and map it against the £750 million small-AIFM threshold and the bands above it.
- Start a FRAME gap list: It could be too soon to start this one, but it could still work as preliminary analysis. Compare what you currently report under Annex IV against what little is public so far about FRAME’s structure, so you’re not starting from zero once CP26/26’s detail firms up.
- Revisit your delegation agreements: If compliance monitoring already sits with a third party, or you’re considering it, make sure the written agreement reflects what the FCA is actually proposing.
None of this requires waiting for the 2027 final rules. It simply requires someone to own it now, before it becomes urgent.
Where this leaves compliance teams
Taken together, we can all agree that these proposals point in a clear and better direction. Less duplicative reporting, obligations that scale with firm size, and greater flexibility over how compliance oversight is resourced and delegated. For a regime that has felt largely static since 2013, this is a meaningful shift, and one most firms will welcome once the detail settles.
About Leo RegTech
With over 20 years of experience, Leo provides an end-to-end compliance infrastructure platform that replaces spreadsheets and fragmented systems and controls with a unified, auditable digital environment. It centralises compliance monitoring, employee compliance, online training, and client due diligence, supported by configurable workflows, registers, reminders, evidence management, and branded reporting.
The platform is designed for regulated financial firms, investment firms and brokers that require clarity, accountability, and operational efficiency across all compliance obligations. With automated scheduling, collaboration controls, secure data capture, and audit trails, Leo enables firms to maintain continuous oversight while improving consistency, productivity, and regulatory defensibility, ultimately serving as an all-in-one operating system for modern, evidence-led compliance.
Sources
- https://www.fca.org.uk/publications/consultation-papers/cp26-26-fund-reporting-asset-management-entities-frame
- https://www.fca.org.uk/publications/consultation-papers/cp26-27-remuneration-reform-solo-regulated-firms
- https://www.fca.org.uk/publications/consultation-papers/cp26-28-uk-aifm-regime
- https://assets.publishing.service.gov.uk/media/6a50d4bd1228eb26a4cab769/Policy_Note_AIFMR.pdf
