The UK is now formally diverging from the EU’s AIFMD and the upcoming AIFMD II, moving toward a light-touch, flexible, FCA led regime designed to promote innovation, competition, and investment growth.
These reforms will reshape the regulatory landscape for UK AIFMs, non UK AIFs marketed into the UK, and managers historically relying on EU-derived thresholds and rules.
1. Major Themes of the UK AIFMD Reform Program
1.1 Repeal of EU derived AIFMD legislation
The UK intends to repeal existing AIFMD Level 1 & Level 2 requirements for firms and recreate obligations within the FCA Handbook. This gives the FCA greater flexibility to adjust rules without lengthy legislative change.
1.2 Removal of AIFM Thresholds (Cliff-Edges)
The long criticized AUM thresholds (€500m / €100m) will be abolished in the UK.
Under the new approach:
- No more small registered vs small authorised vs full-scope AIFMs.
- AIFM categorisation will depend on activities and risk, not assets under management.
- Removes scenarios where firms face sudden compliance jump when crossing AUM thresholds
This is a major divergence from AIFMD II in the EU.
1.3 Redefined Perimeter & Authorisation Requirements
The FCA will redraw the perimeter to clarify who must be authorised, including:
- Managers of unauthorised property CIS
- Internally managed investment companies
This tightens oversight but preserves proportionality for smaller regimes like SEFs and RVECA managers.
1.4 Migration of Rules into FCA Handbook
A broad shift will occur:
- Definitions (e.g., “managing an AIF”) moved into the RAO
- Notification rules (control of non-listed companies) restated
- More flexible update capability for FCA
This “modernisation” is part of the broader UK Smarter Regulatory Framework.
1.5 Cross-Border Business & the NPPR
The UK will preserve its National Private Placement Regime (NPPR), which remains a key route for global managers. This is strategically important because NPPRs in some EU jurisdictions have been tightening under AIFMD II.
1.6 UK vs EU – Intentional Divergence from AIFMD II
EU AIFMD II (April 2026) introduces:
- Loan origination rules
- Liquidity management tools
- Depositary reforms
- Increased reporting
The UK is not implementing these. Instead, the UK focuses on:
- Proportionality
- Lighter burdens
- Faster regulatory updates
- Maintaining competitiveness
This divergence will create two distinct compliance regimes.
2. Expanded Timeline of Key Milestones (2025–2026)
2025
| Date | Event |
|---|---|
| April 2025 | HMT Consultation + FCA Call for Input launched (start of the divergence program) |
| June 2025 | Consultation feedback closes; policy design begins |
2026
| Date | Event |
|---|---|
| H1 2026 | FCA to publish formal consultation on Handbook rule changes |
| Mid–2026 | HMT to publish draft statutory instruments replacing current AIFMD legislation |
| Late 2026 | Expected publication of final rules + transitional/implementation period |
| 2027 onward (expected) | New UK AIFM regime becomes fully operational |
Note: The UK aims for smooth transition with no cliff-edge implementation.
3. What This Means for AIFMs
Simpler but more tailored regulation
No more threshold-driven regulatory obligations.
Greater reliance on FCA rules
FCA will have faster ability to adjust rules without legislative change.
More firms may be pulled into authorisation
Property fund managers, internal AIFMs and others will newly fall inside scope.
Operational & reporting changes
Even with deregulatory intent, firms will need to adapt:
- Revised reporting under new FCA formats
- New perimeter definitions
- Updated notifications
- Changes to disclosures and transparency requirements
4. How Funds Axis Governance Solutions Can Support AIFMs Under the New UK Regime
Funds Axis is well positioned to help managers transition efficiently to the post AIFMD UK framework.
Below are the areas where our platform and managed services can add the greatest value.
4.1 Regulatory Reporting Automation (UK Specific Templates)
As FCA introduces modified reporting obligations, Funds Axis can support by:
- Automating updated Annex IV style returns (or FCA successor forms)
- Ensuring accurate submission under the UK NPPR
- Providing mapping from old EU fields to new UK formats
- Offering rule updates immediately as FCA publishes final standards
This removes the operational risk of misaligned reporting.
4.2 Governance, Risk & Compliance Monitoring
Our platform can ensure your governance framework remains aligned to the new UK rules:
- Monitoring AIFM permissions under the revised perimeter
- Checks for internal AIFMs or property CIS managers that may now require authorisation
- Automated tracking of FCA rule changes migrated from legislation
- Audit trails for board/committee oversight
4.3 Oversight of Delegates & Third Parties
With increased FCA emphasis on activity based supervision:
- Delegate oversight dashboards
- Monitoring of portfolio managers, risk managers and depositaries
- SLA/KPI tracking
- Onboarding assessments under new authorisation categories
4.4 NPPR Cross Border Marketing Support
With the NPPR preserved in the UK:
- Automated monitoring of NPPR filings
- Country specific notification workflows
- Substance checks for marketing exemptions
- Filing calendar automation
Ideal for non UK managers distributing into the UK.
4.5 Policy & Documentation Updates
We can help firms update:
- AIFM policies to match FCA Handbook migration
- Governance frameworks based on activity based approach
- Risk management statements
- Fund disclosure templates
Ensures consistency across UK, EU and global regimes.
