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The Managed Funds Association (MFA) has focused on flexibility in new recommendations to the FCA and HM Treasury (HMT) over 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 Washington DC-headquartered trade group said in a statement.
It released the recommendations 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, the MFA’s 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.”
Its recommendations include:
- 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.
- Avoiding thresholds that discourage growth by automatically triggering new regulatory requirements once firms reach a certain size.
- Improving the National Private Placement Regime by eliminating duplicative and costly reporting requirements that add little investor benefit.
- Eliminating outdated requirements, including private equity company notifications, external valuer liability, and the 20-day marketing pre-notification rule.
- 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.
- Maintaining a flexible, principles-based approach to leverage and risk management, aligned with forthcoming FSB recommendations.
- Replacing depositary requirements for professional investor funds with standard custody and audit controls.
Read the MFA’s full letter to HMT here. Read its full letter to the FCA here.