MFA submitted a comment letter to HM Treasury (HMT) urging it to modernise the UK’s regulatory framework for alternative investment fund managers (AIFMs). The letter was submitted in response to the UK’s broader review of the Alternative Investment Fund Managers Directive (AIFMD), and contained recommendations intended to ensure the UK remains attractive to global asset managers by giving firms greater flexibility to meet regulatory expectations and reducing costs for investors and managers.
MFA recommendations include:
- Adopting an outcomes-based approach to regulation that focuses on achieving core regulatory goals—such as strong risk management and investor protection—while allowing firms flexibility in how they meet those objectives.
- Avoiding thresholds that discourage growth by automatically triggering new regulatory requirements once firms reach a certain size.
- Improving the National Private Placement Regime by eliminating duplicative and costly reporting requirements that add little investor benefit.
- Eliminating outdated requirements, including private equity company notifications, external valuer liability, and the 20-day marketing pre-notification rule.
- Clarifying key regulatory definitions in legislation, including exclusions for vehicles such as single-investor funds, co-investment structures, employee participation vehicles, and carried interest arrangements—reducing legal uncertainty and compliance risk.
- Maintaining a flexible, principles-based approach to leverage and risk management, aligned with forthcoming FSB recommendations.
- Replacing depositary requirements for professional investor funds with standard custody and audit controls.
