On 14 July 2026, the FCA published three consultation papers, setting out the most substantial reform of the UK Alternative Investment Fund Managers (AIFM) regime.

Read together, CP26/26, CP26/27, and CP26/28 touch almost every authorised and unauthorised fund manager operating in the UK, from the smallest venture capital manager to the largest global hedge fund.

For firms across the asset management sector, this is not a routine compliance update. It is a fundamental redesign of how firms are categorised, what they must report, and how they may pay their people.

The three papers, in brief

CP26/28: The UK AIFM Regime

In this paper, the FCA proposes replacing much of the current AIFMD-derived framework with a new, proportionate rulebook (a new sourcebook, ALTS).

What this means in principle is a move from a two-tier system based on assets under management (AUM) to a three-tier system based on aggregate net asset value (NAV), with the categorisation of firms as follows:

• Small AIFMs (managing AIFs with an aggregate NAV of under £750 million).

• Medium AIFMs (£750 million to £5 billion).

• Large AIFMs (over £5 billion).

The consultation also proposes scrapping the current leverage calculation methods, easing valuation liability, and replacing prior approval for delegation to unauthorised entities with post-delegation notification.

CP26/26: Fund Reporting for Asset Management Entities (FRAME)

This paper proposes a single reporting framework to replace the patchwork of existing forms, including Annex IV (AIF001 and AIF002) and FSA042.

The new reporting requirements would scale with a fund's size (an "essential" tier below £500 million NAV and an "enhanced" tier above £500 million) rather than the size of the manager. It would also introduce, for the first time, holdings-level reporting for UK UCITS and NURS funds, alongside new event-based reporting for large hedge funds following significant drawdowns.

CP26/27: Remuneration: Solo-regulated firms' rules reform

This paper proposes replacing the three existing remuneration codes for AIFMs, UCITS management companies, and MIFIDPRU investment firms with a single, outcomes-focused code (SYSC 19AA). It moves away from prescriptive deferral, malus, and clawback requirements towards governance-led judgement, narrows the definition of a "material risk taker", and removes small and non-interconnected MIFIDPRU firms from remuneration requirements altogether.

Why this matters?

These three consultations are designed to be read together, and the FCA has been explicit that the reforms are interdependent. A firm's size category under CP26/28 will determine its reporting obligations under FRAME and, eventually, its position within the new remuneration code under CP26/27. Firms that assess these papers in isolation risk missing how the changes interact.

For firms, the practical steps to take following this consultation include:

• Assessing which size category they will fall within under the revised NAV-based thresholds and the resulting implications for reporting, valuation, depositary, and remuneration requirements for their category.

• Preparing for a new reporting regime and, for many firms, a significant reduction in reporting burden, alongside new data requirements they have not previously had to produce, such as portfolio holdings and financing maturity data.

• Reviewing remuneration policies, deferral arrangements, and governance structures well ahead of a phased implementation.

• Managing the transition itself, given the deliberately staggered consultation deadlines and implementation dates set out below.

Timeline of key dates

Closing remarks

The breadth and scale of these reforms will require fund managers to carefully assess their operating models, governance frameworks, and regulatory reporting obligations. From threshold modelling and data gap analysis to remuneration reviews and consultation responses, firms will be looking for practical, actionable guidance. Our Financial Services specialists are already helping clients understand the implications and prepare for what comes next.

Over the coming weeks, we will be publishing a series of in-depth articles examining the key proposals set out in the consultation. These insights are designed to help firms understand the changes being introduced, assess the potential impact on their business, and identify the practical steps required to prepare for the proposed regime.