The FCA’s CP26/28 consultation proposes a more proportionate UK regulatory framework for Alternative Investment Fund Managers, with requirements calibrated more closely to firms’ size and activities. Although the proposals are specific to the alternative investment sector, their focus on risk management, oversight, investor information and clearly defined responsibilities may also interest compliance and governance teams elsewhere in financial services. Firms should be careful not to treat the consultation as creating new cross-sector requirements, but it provides another example of the importance regulators place on effective oversight supported by reliable information and records.
Why is the FCA reforming the AIFM regime?
The FCA’s consultation brings a substantial package of proposed changes to the UK’s framework for Alternative Investment Fund Managers. The objective is to create a more proportionate, flexible and UK-focused regulatory regime while maintaining appropriate standards for protecting consumers and safeguarding market integrity.
A key theme throughout the consultation is proportionality. The regulator is seeking to align requirements more closely to firms’ size, activities and risk profiles, reducing unnecessary complexity while maintaining effective oversight.
The FCA currently envisages implementation in 2028 and this consultation provides an early indication of the regulatory principles that are becoming increasingly visible across financial services regulation.
What the proposals suggest about information and oversight
One of the most significant signals within the consultation is the continued emphasis on the quality of information available to firms and regulators.
Although CP26/28 is primarily concerned with reform of the AIFM regime, its detailed proposals underline the continuing importance of reliable information, clearly defined responsibilities and effective oversight. This sits within a broader FCA focus on firms being able to explain how important decisions are made and how relevant risks are managed.
The proposed reforms cover areas including risk management, liquidity, valuation, delegation, disclosures and annual reporting to investors. Published alongside the FCA’s separate consultation on fund reporting, they also illustrate the regulator’s wider focus on ensuring that regulatory requirements produce useful and proportionate information.
For firms across financial services, this reinforces an important question:
Can you show how material decisions are made, how relevant risks are assessed and how oversight operates in practice?
Better information, stronger oversight
The FCA’s proposals seek to improve how information is reported, shared and used. Better quality governance information has the potential to support stronger oversight, more effective challenge and more reliable decision-making.
As regulators continue to focus on outcomes rather than processes alone, firms are increasingly expected to show how governance forums, risk teams and compliance functions use information to identify emerging issues and take action where appropriate.
The ability to capture, organise and retrieve evidence of those activities is becoming an increasingly important aspect of regulatory readiness.
Why firms beyond asset management should pay attention
Firms outside the AIFM regime are not directly affected by these proposals solely because they are FCA regulated. However, compliance and governance teams may find the consultation useful as one example of the FCA seeking to combine proportional requirements with effective oversight and accountability.
The FCA continues to place importance on effective governance, oversight and firms’ ability to explain and evidence how key decisions are reached and monitored.
For compliance leaders and governance teams, this places greater importance on:
- Capturing evidence of decision-making
- Demonstrating effective challenge and oversight
- Maintaining clear governance records
- Linking management information to regulatory, investor or customer outcomes
- Creating auditable records of monitoring activity
These are increasingly important capabilities regardless of a firm’s regulatory classification.
The broader regulatory direction
The consultation aligns with a wider trend across financial services regulation. Regulators are seeking to reduce unnecessary complexity while maintaining accountability for outcomes and decision-making.
That means firms may ultimately operate within more proportionate regulatory frameworks, but they should also expect continued scrutiny of how decisions are made, monitored and evidenced.
The quality of governance records, oversight documentation and management information may become as important as the existence of the underlying process itself.
What should firms do now?
While final rules remain some way off, organisations may wish to use the consultation as an opportunity to assess the quality of their governance evidence and oversight records.
Areas to consider include:
- Reviewing how governance decisions are documented
- Assessing the quality and accessibility of management information
- Evaluating whether oversight activities can be evidenced effectively
- Identifying gaps in governance record-keeping
- Considering whether customer outcome monitoring can be more easily demonstrated
The consultation may be focused on AIFMs, but it provides a useful reminder of the importance regulators place on robust oversight, clear responsibilities and reliable information.
What we'll be watching
As the consultation develops, firms may wish to pay particular attention to:
- How CP26/28 interacts with the FCA’s separate FRAME proposals for fund reporting
- The role of governance information in regulatory oversight
- Expectations around evidence-based decision-making
- Final firm-size thresholds and the proposed categorisation framework
- Interaction with wider Treasury legislation
These areas could offer further insight into how regulatory expectations around governance and accountability continue to evolve.
What is CP26/28?
CP26/28 is the FCA’s consultation on a proposed new UK regulatory framework for Alternative Investment Fund Managers. The consultation explores how the regime could become more proportionate and flexible while maintaining appropriate protections.
Who is directly affected by FCA’s CP26/28?
The CP26/28 consultation is primarily relevant to AIFMs and other organisations involved in the alternative investment fund market. However, the themes around governance, reporting and oversight may have wider relevance across financial services.
When could the FCA CP26/28 proposals take effect?
The FCA currently envisages implementation in 2028, subject to the CP26/28 consultation feedback, further rulemaking and associated legislative reforms.
Why might CP26/28 be relevant to governance and compliance teams?
The FCA’s CP26/28 consultation reinforces broader regulatory themes around governance, oversight, management information and firms’ ability to evidence decision-making and oversight.
What role do records play in demonstrating effective oversight?
Across a range of regulatory frameworks, firms may be expected to retain sufficient information to explain how material risks were identified, decisions were reached and relevant outcomes were monitored. This is a broader regulatory observation rather than a specific new requirement proposed in CP26/28.
Are your governance records ready for increasing regulatory scrutiny?
As regulatory expectations continue to evolve, many firms are focusing on the quality, accessibility and consistency of the evidence used to support oversight and decision-making.
Considering whether monitoring activities and resulting outcomes can be more easily demonstrated, why decisions were taken and how customer outcomes were monitored is becoming an increasingly important component of good governance.
Strengthen the evidence behind compliance oversight
Recordsure helps regulated firms capture and analyse customer interactions and documentation, apply automated compliance checks and create accessible, auditable evidence for review and oversight.
If your firm is reviewing the quality of its records, monitoring information or compliance evidence, our specialists can help you explore how Recordsure could support more efficient and consistent oversight.
Talk to Recordsure today.
