FCA

Financial Conduct Authority (UK)

High Impact

FCA consults on reforming the UK AIFM regime and creating a new ALTS sourcebook

Published

Jul 13, 2026

Topics

AIFMD, Alternative investment funds, Asset management, Fund managers, FCA Handbook, Regulatory reform, Prudential regulation, Fund reporting, Remuneration, UK financial regulation

Executive Summary

The FCA is consulting on significant reforms to the UK AIFM regime for managers of alternative investment funds, including hedge funds, private equity funds and real asset funds. CP26/28 proposes to make the regime more proportionate to firms’ size and activities, update size thresholds, introduce a new small/medium/large three-tier structure, and consolidate most AIFM rules into a new Alternative Investment Funds sourcebook (ALTS). The consultation is relevant to UK-authorised and UK-registered AIFMs, firms marketing AIFs in the UK, residual CIS operators, depositaries, prime brokers, delegates, prospective market entrants, trade bodies, investors and UCITS management companies in relation to the prudential discussion chapter. No final rules are yet in force; firms should treat this as a major change programme requiring consultation-response coordination, impact assessment, rule mapping, and implementation planning ahead of the FCA’s expected policy statement, a further consultation on remaining areas, and an envisaged 2028 implementation date.

What Changed

modifiedAIFM size and proportionality framework

The current UK AIFM framework is derived from EU AIFMD retained in UK law, with requirements spread across legislation, Treasury regulations and FCA rules. The FCA states that some size thresholds have become dated and that the existing approach does not sufficiently distinguish between different AIFM business models and risk profiles.

New

The FCA is consulting on updated size thresholds and a new small/medium/large tiering model, with graduated rules replacing the current approach. Exact threshold values and rule text should be confirmed against the CP26/28 PDF and any final policy statement before implementation.

newAlternative Investment Funds sourcebook (ALTS)

AIFM requirements are currently distributed across retained EU-derived law, Treasury regulations and FCA rules, creating complexity for firms managing compliance obligations.

New

Most AIFM rules would be consolidated into a proposed new Alternative Investment Funds sourcebook, ALTS, subject to consultation outcome and final rules.

modifiedActivity-based risk calibration

The FCA considers that some existing requirements do not sufficiently distinguish between AIFMs conducting different types of business.

New

The consultation proposes a more risk-sensitive framework that calibrates requirements by firm size and activities, although final obligations will depend on the policy statement and final rule text.

newConsultation package linked to FRAME and remuneration reforms

AIFM regime requirements, reporting and remuneration obligations are currently addressed through existing UK AIFMD-derived requirements and FCA rules.

New

Firms should assess CP26/28 together with the related FCA consultations on FRAME and remuneration reform because operational implementation may involve rule mapping, reporting-process changes and remuneration-policy review.

modifiedConsultation and implementation path

No CP26/28 response process or ALTS implementation timetable existed before this consultation was published.

New

Consultation is open from 14 July 2026, with staggered response dates in September and October 2026, followed by FCA final rules, a further consultation on remaining areas, and an envisaged 2028 implementation date.

Business Impact

Who is affected

UK-authorised AIFMs, UK-registered AIFMs, firms marketing alternative investment funds in the UK, residual CIS operators, depositaries, prime brokers, delegates of AIFMs, firms considering entering the UK alternative investment market, trade bodies and industry associations representing asset managers, investors in AIFs including professional and retail investors, and UCITS management companies for the prudential discussion chapter.

Jurisdictions

United Kingdom

Business processes

Regulatory change management and consultation-response governance, AIFM authorisation and registration perimeter assessment, AIFM size-tier and threshold classification controls, FCA Handbook and rule-mapping inventories, AIF governance, risk management and compliance monitoring, Marketing of AIFs in the UK, Depositary, prime broker and delegate oversight, Prudential assessment for fund managers, Remuneration governance for asset managers where linked to the parallel FCA consultation, Fund reporting impact assessment, including coordination with the separate FCA FRAME consultation, Board and senior management regulatory implementation planning

Estimated effort

High

Compliance risk

High

Affected Reports

CP26/28 consultation response tracker and approval recordAIFM size-tier classification and threshold assessment controlAIFM rule-mapping inventory to proposed ALTS sourcebookAIFM implementation gap assessment and remediation planAIFM regulatory reporting impact assessment to be coordinated with the separate FCA FRAME consultation

Field	Validation rule
AIFM size tier or classification	CP26/28 proposes a new small, medium and large three-tier AIFM structure with updated size thresholds and graduated application of rules; final values and obligations must be confirmed from the CP26/28 draft rules and final FCA policy statement.
AIFM rule source or Handbook mapping	CP26/28 proposes a new Alternative Investment Funds sourcebook, ALTS, to consolidate most AIFM rules in one place.
Consultation response due date	Main CP26/28 responses are due by 14 October 2026; responses to discussion chapters are due by 18 September 2026 except the prudential reforms discussion chapter, which closes on 14 October 2026.
Implementation planning date	The FCA states that the implementation date currently envisaged for the new regime is 2028.

Recommended Actions

1
Assign an accountable regulatory-change owner for CP26/28 and establish a cross-functional working group covering legal, compliance, portfolio management, risk, operations, reporting, remuneration, product, distribution and service-provider oversight.
2
Confirm whether each group entity and fund management activity falls within the consultation population: UK-authorised AIFM, UK-registered AIFM, UK AIF marketing firm, residual CIS operator, depositary, prime broker, delegate, prospective entrant, investor-facing business, or UCITS management company affected by the prudential discussion chapter.
3
Prepare a consultation-response plan immediately. Prioritise discussion-chapter feedback required by 18 September 2026 and main consultation and prudential discussion feedback required by 14 October 2026.
4
Model the firm and fund population against the proposed small, medium and large AIFM structure once the CP26/28 PDF draft rules and threshold values have been reviewed. Document assumptions and avoid treating proposals as final until the FCA publishes final rules.
5
Create a current-state to future-state rule map from existing UK AIFMD-derived obligations and FCA Handbook provisions to the proposed ALTS structure, identifying policy owners, controls, evidence, systems and outsourced processes for each obligation.
6
Assess whether the proposed risk-sensitive approach affects governance, risk management, investment activity controls, leverage or liquidity oversight, illiquid asset processes, valuation governance, delegation oversight, depositary arrangements and prime brokerage oversight.
7
Coordinate CP26/28 analysis with the related FCA consultations on FRAME and remuneration reform, because implementation may need aligned changes to reporting processes, data ownership, governance forums and remuneration policies.
8
Monitor the Treasury’s parallel consultation on underlying legislation and the FCA’s planned second consultation on remaining AIFM regime areas before finalising the implementation roadmap.
9
For firms affected by prudential reforms, consider registering interest in the FCA’s September 2026 prudential roundtable and prepare questions or evidence for discussion.
10
Brief the board or relevant governance committee on the strategic implications, consultation deadlines, expected 2028 implementation planning horizon and areas where business-model or operating-model changes may be needed.

Timeline

publication

Jul 14, 2026

FCA published CP26/28 and opened consultation on the UK AIFM regime.

other

Sep 1, 2026

FCA plans to host a prudential roundtable as part of its engagement on reviewing the prudential regime for fund managers.

consultation deadline

Sep 18, 2026

Deadline for responses to the CP26/28 discussion chapters, except the discussion chapter on prudential reforms.

consultation deadline

Oct 14, 2026

Deadline for responses to the main CP26/28 consultation and the discussion chapter on prudential reforms.

implementation

Jan 1, 2028

FCA states that the implementation date currently envisaged for the new AIFM regime is 2028.

Sources

AI-generated analysis is based on the following primary sources. Always verify against the official publication.

Consultation paper webpageFinancial Conduct AuthorityJul 14, 2026
CP26/28: The UK AIFM Regime ↗
https://www.fca.org.uk/publications/consultation-papers/cp26-28-uk-aifm-regime
Official FCA regulatory information webpageFinancial Conduct AuthorityInvalid Date
AIFMD (UK) ↗
https://www.fca.org.uk/firms/aifmd-uk
Official FCA regulatory reporting webpageFinancial Conduct AuthorityInvalid Date
AIFM reporting ↗
https://www.fca.org.uk/firms/aifmd/reporting

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