The UK's AIFM Shake-Up: Why Authorisation, Not Admin, Is the Real Story

The FCA has opened the biggest rewrite of the UK's alternative investment fund manager rules since AIFMD arrived in 2013. Two consultations, CP26/28 on the regime itself, and CP26/26 ("FRAME") on how funds report, are being sold as a proportionality exercise: less paperwork, tiered obligations, a simpler rulebook. All of that is true. It's also not the headline.

What's actually on the table

CP26/28 scraps the current AUM and leverage-based way of classifying AIFMs and replaces it with three tiers, set by Net Asset Value: small (under £750m), medium (£750m to £5bn), and large (over £5bn). Every requirement currently scattered across onshored EU legislation gets folded into one new FCA sourcebook. Delegation moves from needing prior approval to a notify-after model. Valuation independence gets a lighter, proportionate test, but the liability for getting it wrong shifts onto the manager.

CP26/26, FRAME, rebuilds fund-level reporting around the same logic: funds under £500m NAV get a slimmed-down "essential" return, larger funds keep something closer to today's depth. The FCA's own numbers claim a 90%-plus cut in reporting effort for smaller funds, alongside a new obligation to flag a 10% drawdown within 72 hours, real-time monitoring, not a quarterly tick-box.

Both consultations are still partly open. The prudential reforms discussion chapter under CP26/28, and the whole of FRAME, run to 22 October 2026. Everything is pencilled in for 2028.

The question everyone's asking, and the one that matters more

Most of the reaction so far has been about mechanics: where the tier lines fall, how the new delegation notifications will work, what the valuation liability shift means for existing contracts. Fair questions, and worth getting right. But they assume the firm asking them is already authorised.

A lot of smaller managers aren't. Boutique managers, multi-family offices running co-mingled vehicles, platform-adjacent fund structures, many have operated on registered rather than authorised status for years, precisely because full authorisation felt like overkill for their size. CP26/28 abolishes that registered category for everyone except venture capital and social entrepreneurship fund managers. Registered today means a full FCA authorisation process tomorrow: SMCR-ready governance, a defensible valuation process, and, unless your existing custody arrangements already meet the bar, a depositary relationship, built from close to nothing.

That's not an administrative task. It's a governance build, and it doesn't happen in a quarter.

The proportionality trap

There's a second, quieter catch. The FCA has been explicit that a lower tier won't automatically mean a lighter touch, and any firm that grows across the £750m or £5bn NAV line only gets six to twelve months to adapt to what comes next. For a manager actively raising capital, merging funds, or eyeing a bolt-on acquisition, NAV tier position stops being a number compliance checks once a quarter and becomes something the deal team needs to model before it happens, not after.

What forward-looking firms are doing now

• Mapping current and projected NAV against the new tier lines, for the firm and for each fund under FRAME's separate £500m threshold.
• Being honest about authorisation status. If the answer is "registered", scoping the gap to full authorisation before it becomes urgent.
• Costing out the valuation liability shift as a commercial and insurance decision, not just a legal one.
• Deciding, before 22 October, whether it's worth a seat at the table on the still-open chapters.

Where this leaves you

None of this is legal advice, we're not a law firm, and the legal mechanics are being well covered elsewhere. Where we think we add something different is on the governance, proposition and infrastructure side: working out what tier you're heading for, what authorisation-readiness actually requires, and what your reporting infrastructure needs to look like before FRAME's prototype testing opens later this year.

If you want to talk through what CP26/28 and FRAME mean for your structure specifically, get in touch with your Trescore contact.