The Chair of the FCA, Ashley Alder, gave a speech on 11 October 2023 outlining the regulator’s approach to the reform of the UK’s asset management regulatory regime. The FCA is focusing on a “smart approach to proportionality”, which it believes is closely related to the long-term competitiveness of the industry. It will initially pursue the following three aims.
- Making the AIFMD more proportionate: moving to a single set of rules for all AIFMs, but applying the rules “proportionately depending on the nature and scale of a firm’s business”. Also, addressing the issues that full-scope AIFMs have in undertaking other regulated activities in the same legal entity, and reviewing the reporting burden on AIFMs.
- Updating the Non-UCITS Retail Schemes (NURS) regime: simplifying the rules when an AIF, such as a NURS, is marketed solely to retail investors. Also, considering options to rebrand the NURS regime.
- Supporting asset managers’ use of distributed ledger technology (DLT): ongoing work on tokenisation of funds alongside the Treasury's Asset Management Taskforce, and changes to the UK fund dealing model (Direct2Fund proposals). All of the above is with a focus on proportionality, simplification, and aiming for international consistency to minimise complexity for firms.
The remainder of Alder's speech was about the actions that the FCA and the Government are doing to channel domestic savings into growth-building activities in the UK (which they call “productive finance”). This includes the creation of the Long Term Asset Fund and reforms to the pensions framework, such as the introduction of a value of money requirement for DC pension schemes. Alder also mentions the upcoming changes to the financial advice/guidance boundary, in order to ensure firms can support consumers through different models of help tailored to their needs, the scrapping of the prescriptive PRIIPs legislation and its replacement with a new principles-based Retail Disclosure Regime, and reforms to the listing rules.