FCA consults on registration of authorised fund assets

On 21 May 2026, the Financial Conduct Authority (FCA) published a consultation paper on the registration of authorised fund assets (CP26/16).

Under existing rules, depositaries of authorised AIFs managed by full-scope AIFMs cannot delegate certain safekeeping functions for assets that are not AIF custodial assets (e.g.  Immovables such as real estate and partnerships that are not Collective Investment Schemes (CIS)). This means that depositaries or their controlled nominees must hold legal title to those fund assets. New legislation increasing the potential criminal and financial liabilities for building owners, has led to some depositaries (who do not directly control the assets or make the decision to invest in them) to withdraw services for funds investing in those assets (no longer wishing to carry these ancillary legal and financial risks associated with legally owning these asset types). This has the potential to crystallise the risk of, among other things, reduced investor choice if they cannot invest in important private markets asset classes via authorised AIFs, with an impact on the managers too.  The proposals in CP26/16 seek to address this issue.

The FCA is of the view that private markets (such as real estate, infrastructure, private credit and private equity) are vital to UK economic growth and the UK financial sector and, as a result, it considers the ability of authorised Alternative Investment Fund’s (authorised AIFs) practical ability to invest in private markets assets a valuable one to safeguard (while still protecting fund investors).

In light of this, the FCA CP sets out the FCA's proposals to amend its rules to enable depositaries of authorised alternative investment funds (AIFs) managed by full-scope AIF managers (AIFMs) to delegate certain asset registration and custody functions. 

The proposals (which include changes to FCA rules derived from the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD)) would:

• remove an existing restriction on the depositary of an authorised AIF with a ‘full scope’ AIFM delegating its COLL registration function and CASS 6 custody function (as relevant) for assets that are not AIF custodial assets to third parties.  The FCA propose to allow such delegations to a regulated custodian where the asset is a safe custody investment, as would be required under the relevant CASS 6 requirements for depositing assets with a third party which would also apply, and to an affiliate of the AFM where such an asset is not a safe custody investment (with new proposed protections as below in this latter case). This would mean the depositary or its controlled nominees would no longer have to hold legal title to, for example, registered land or be partners in partnerships for funds (the FCA are of the view that most or all of the funds impacted by this issue are managed by full scope AIFMs).
• for ‘immovables’ located in the UK (this includes buildings and land), provide that the persons permitted to act as the depositary’s delegate for the COLL registration function should be ‘affiliates’ of the AFM that also take the form of a UK company subject to the CA 2006. This is to safeguard both Parliament’s policy intentions with regard to (in particular) UK building safety, and the protection of the funds’ interests
• provide ‘additional protections’ for delegations of the COLL registration function for assets that are not safe custody investments or AIF custodial assets, to mitigate the residual risks
• change the existing COLL registration function requirements and delegation options for the depositary of an authorised AIF with a Small AIFM by: a) limiting the persons to whom the depositary can delegate the function in respect of assets that are not safe custody investments or AIF custodial assets to ‘AFM’s affiliates’ only; and b) imposing the same ‘additional protections’ as the FCA have proposed for when the depositary of a ‘full scope’ fund delegates this in respect of such assets.

• impose a stronger liability in respect of the delegation of the COLL registration function on depositaries of QIS with small AIFMs than currently for such assets (to ensure that their level of liability will remain unaffected even when delegating the function)

  A draft of the FCA instrument making the proposed changes to the Glossary, CASS, COLL and FUND, the Collective Investment Schemes (Registration of Assets) Instrument 2026, is set out in Appendix 1 to CP26/16.

Next steps

The FCA is requesting feedback on its proposals by 9 July 2026