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Thursday, 6 August 2026

Compiled with AI from public news sources. Folio is editorial commentary for commercial-awareness practice, not legal advice. Verify any detail against the linked sources before relying on it professionally.

All M&A Capital Markets Banking & Finance Energy & Tech Regulation Disputes International AI & Law

Top Story/Regulation

FCA consults on a three-tier overhaul of the UK alternative investment fund manager regime, diverging materially from EU rules and raising authorisation obligations for hundreds of smaller managers

On 14 July 2026, the Financial Conduct Authority (FCA) and HM Treasury published detailed reform proposals for the UK regime governing alternative investment fund managers (AIFMs), the firms that manage hedge funds, private equity vehicles, real estate funds and other alternative investment funds (AIFs). The FCA published Consultation Paper CP26/28, while HM Treasury published a draft Statutory Instrument (SI) and accompanying Policy Note. The centrepiece of the reform is a move from the existing framework, derived from the EU's Alternative Investment Fund Managers Directive (AIFMD) and implemented in the UK through The Alternative Investment Fund Managers Regulations 2013, to a three-tier proportionate system based on net asset value (NAV). Under the proposed thresholds, AIFMs with NAV below £750 million would be classified as small, those between £750 million and £5 billion as medium, and those above £5 billion as large. Regulatory obligations would scale proportionately across tiers. A critical structural change is the removal of the existing registration regime, which allowed some smaller AIFMs to avoid full FCA authorisation. Under the SI, these firms, including unauthorised property collective investment schemes and internally managed closed-ended funds above the small AIFM threshold, will need to become fully FCA-authorised. No grandfathering provisions are proposed, though implementation is expected by 2028. The FCA will also house most requirements in a new consolidated sourcebook called ALTS (Alternative Investment Funds sourcebook), replacing the current patchwork of rules. Importantly, the UK reforms do not replicate amendments to the EU's AIFMD made since Brexit, meaning the two regimes will diverge materially when the new UK framework takes effect. Alongside CP26/28, the FCA is also consulting on remuneration reforms under CP26/27 and a new asset manager reporting regime under CP26/26.

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Energy & Tech

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International

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“ISO 14001 clauses are moving from voluntary annexes into hard covenant requirements in ESG-linked financing…”

Bigger Picture

Sector Watch

AIFM Regime Divergence Accelerates

The FCA's consultation on a three-tier UK AIFM regime, published alongside HM Treasury's draft Statutory Instrument on 14 July 2026, is the most consequential UK asset management regulatory event of the year. The deliberate decision not to track EU AIFMD amendments since Brexit means that by 2028, when the new UK framework takes effect, dual-jurisdiction fund managers will be navigating materially different rulebooks in London and across the Channel. Firms with strong regulatory practices serving alternative asset managers, including Latham and Watkins and Womble Bond Dickinson, are already publishing detailed client alerts. The removal of the registration exemption for smaller AIFMs, with no grandfathering, will drive a significant wave of FCA authorisation applications over the next 18 months, generating sustained regulatory advisory demand.

One to Follow

The FCA's Upper Tribunal substantive hearing on the £7.5 billion motor finance redress scheme, scheduled for 14 to 18 December 2026 or 16 to 26 February 2027 if postponed, following the Tribunal's partial suspension of the scheme on 1 July 2026

The outcome will determine whether the largest consumer redress scheme in UK financial history proceeds, collapses, or is materially restructured, with direct consequences for banking and finance, regulatory, and disputes practices advising lenders, the FCA, and potentially millions of motor finance customers. Firms advising lender clients on the scheme must continue system preparation without making payments, creating a live compliance and litigation-readiness tension that will intensify as the hearing date approaches.

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