The UK regulatory space has come alive recently, so there will be a few files to discuss in the coming weeks.
This week, I discuss:
- The results from FCA's review of smaller asset managers
- Our win on new FCA rules for investment research
- Our view on improving small business access to finance
Read hedge fund letters here
Have a great week.
Drew Nicol, Director, Research and Communications, AIMA
Disclaimer: All views expressed in this blog are my own, not AIMA's.
The results are in...
Late last week, the UK's Financial Conduct Authority (FCA) published the findings from its review of smaller asset managers, which includes areas for improvement and good practice.
The review covered 410 firms with assets under management of less than £1 billion, collectively managing approximately £220 billion in assets. The work looked at high-risk investments, conflicts of interest and the Consumer Duty.
Importantly, these findings will inform the wider UK asset management review scheduled for later this year. Therefore, we welcome the FCA’s publication of its findings from the smaller asset managers and alternatives business model review.
Doing this gives helpful insight into how the FCA will set its regulatory expectations for smaller firms in its wider review of the UK’s rules for alternative investment fund managers.
The FCA agrees with us on research payment rules
Even later last week, the FCA introduced a new payment option for investment research, creating a level playing field for research for UK collective portfolio managers and MiFID investment firms.
We're happy about this because we called for the regulator to revise its final rules to provide greater flexibility around key guardrails, including the setting of research budgets.
Specifically, fund managers may now set research budgets at either the individual fund level or at a level of aggregation that aligns with their investment processes. The FCA has also amended the guardrails concerning written policies, cost allocation and disclosure requirements where research budgets are exceeded or increased.
AIMA responds to HMT call for evidence on small business access to finance
The Treasury is seeking views on how to improve the availability and affordability of finance for UK SMEs, with a particular focus on the role of non-bank lending models, borrower awareness, and structural barriers within the market.
Our response offers a perspective on the contribution of private credit and highlights three key points:
- Private credit is now a mainstream and reliable source of SME finance, supporting a growing share of small and mid-sized businesses through tailored, long-term lending that complements bank provision.
- Securitisation reform is a practical and underutilised lever for expanding SME finance, enabling both banks and non-bank lenders to recycle capital and serve more borrowers at lower cost.
- Borrower education remains a critical challenge.
About AIMA:
The Alternative Investment Management Association (AIMA) is the global representative of the alternative investment industry, with around 2,100 corporate members in over 60 countries. AIMA's fund manager members collectively manage more than US$3 trillion in hedge fund and private credit assets.
