HMT issues draft SI and policy note on the Alternative Investment Fund Managers Regulations 2026

On 14 July 2026, HM Treasury (HMT) issued draft statutory instrument and policy note on the Alternative Investment Fund Managers Regulations 2026.

Background

The Alternative Investment Fund Managers Directive (AIFMD) (Directive 2011/61/EU) was introduced in 2011 in the EU with the aim of harmonising the regulatory framework for funds and fund managers not already in scope of EU regulation. The AIFMD was implemented in the UK in 2013 via a combination of the Alternative Investment Fund Managers Regulations 2013 (AIFMR), EU Delegated Regulations (Level 2 Regulations), and Financial Conduct Authority (FCA) rules and guidance.

As part of the Financial Services Growth and Competitiveness Strategy, the Government committed to commence the repeal of the Alternative Investment Fund Managers Regulations 2013, such that the firm facing requirements can be replaced with FCA rules.

HMT’s publications are accompanied by several FCA consultations [insert link to blog on FCA CPs here], which will outline what they propose their rules will look like under this new regime.

Summary

In summary this instrument will primarily:

• Remove most firm-facing requirements to allow new tailored requirements to sit in FCA rules: The proposed provisions in this draft Statutory Instrument (SI) make use of the powers of Financial Services and Markets Act 2023. They are intended to replace those provisions contained in the assimilated law relating to the management of AIFs, once the repeal of this law is commenced.

• Clarify the definition of an AIF: This instrument clarifies the definition of an Alternative Investment Fund (AIF) reflecting some of what was previously in FCA guidance, in particular this instrument clarifies that what is currently called a ‘defined investment policy’ can be implicit, and that the ‘raising capital’ criterion should not just apply to funds actively raising capital in the present moment.

• Reform the registration regime: The small, registered regime applies to three categories of sub threshold Alternative Investment Fund Manager (AIFM) and exempts them from the requirement to seek FCA authorisation when managing certain AIFs. This instrument removes the AIFM registration regime for all AIFMs except those managing Registered Venture Capital Funds (RVECA) and Social Enterprise Funds (SEF). The Government will consider the regulatory approach to RVECA and SEF managers in due course, as part of a review of venture capital expected in 2028, including whether a registration regime remains appropriate for these fund managers.

• Exempt small internally managed investment companies who meet certain conditions: The reform to the registration regime means that unauthorised property fund managers and those internally managed AIFMs, outside the new exemption for certain internally managed listed closed-ended investment companies (LCICs), will need to become authorised under the new regime.

• Remove the thresholds at which firms are subject to significantly more requirements: This will allow the FCA to create a more proportionate regime, with requirements increasing incrementally as firms grow, and only the largest firms being subject to the most prescriptive rules akin to the current full scope AIFM regime.

• Maintain the National Private Placement Regime for overseas AIFMs and AIFs: This instrument makes minimal changes to the National Private Placement Regime (NPPR) for UK and third country AIFMs marketing certain AIFs in the UK, while providing the FCA with additional powers to reform reporting requirements for domestic and overseas funds operating in the UK.

• Simplify private equity portfolio company disclosures: HMT sets out that it is satisfied that the requirement for AIFMs to notify the FCA of their control of voting rights in a portfolio company at regular intervals is unnecessary and burdensome, given that the FCA has no means to use this data. The instrument therefore removes this requirement.

• Make certain changes in relation to depositaries: The instrument maintains the requirement that AIFMs remain liable to the AIF and its investors when functions have been delegated but removes the majority of the remaining 15 requirements from the face of legislation, to enable to the FCA to replace these with appropriate rules.

• Make other changes to rationalise the regime with how the market functions: This instrument restates the existing regulations around depositary liability and maintains the requirement that a UK AIFM marketing a non-UK AIF in the UK must appoint one or more entities to carry out the depositary functions. In addition, under the existing regulations, managers of AIFs may choose to appoint an outside firm to value the investments in a fund and calculate its net asset value (NAV) but the legislation places unlimited liability onto an external valuer for any losses caused by the valuer being negligent or intentionally failing to perform its tasks, HMT now proposes to remove this requirement from legislation.

Next steps

HMT will consider technical comments on this draft statutory instrument, focused on any changes that need to be made to this draft instrument to achieve the policy intent set out in its policy note. HMT has asked for feedback to be provided by 14 October 2026.