Recommendations to HMT and the FCA would reduce unnecessary burdens, enhance flexibility, and strengthen UK growth and competitiveness
London, UK — MFA made recommendations to the Financial Conduct Authority (FCA) and HM Treasury (HMT) today for modernising the UK’s regulatory framework for alternative investment fund managers (AIFMs). The recommendations are intended to strengthen the UK’s international competitiveness by giving firms greater flexibility to meet regulatory expectations, and reducing costs for investors and managers. The recommendations were made in response to the UK’s broader review of the Alternative Investment Fund Managers Directive (AIFMD), specifically HMT’s consultation on proposed legal reforms and the FCA’s Call for Input on future AIFM regulation.
“A modernised regulatory framework for AIFMs is necessary to keep the UK competitive in a rapidly evolving global market,” said Jillien Flores, MFA Chief Advocacy Officer. “MFA’s recommendations encourage policymakers to strike the right balance by preserving high regulatory standards while giving managers the flexibility they need to grow, innovate, and deliver for institutional investors, including pension funds. MFA is committed to working with the Government and the FCA on reforms that unlock investment, fuel economic growth, and keep the UK at the heart of global capital markets.”
A modernised AIFMD regime will help ensure the UK remains attractive to global asset managers and delivers better outcomes for investors who rely on alternative investment strategies.
MFA recommendations include:
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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.
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Avoiding thresholds that discourage growth by automatically triggering new regulatory requirements once firms reach a certain size.
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Improving the National Private Placement Regime by eliminating duplicative and costly reporting requirements that add little investor benefit.
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Eliminating outdated requirements, including private equity company notifications, external valuer liability, and the 20-day marketing pre-notification rule.
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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.
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Maintaining a flexible, principles-based approach to leverage and risk management, aligned with forthcoming FSB recommendations.
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Replacing depositary requirements for professional investor funds with standard custody and audit controls.
Read the full letter to HMT here.
Read the full letter to the FCA here.
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About the global alternative asset management industry
The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.
About MFA
Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.
