FRAME: The FCA’s new fund reporting regime (CP 26/26) – reforming fund level reporting and casting the net wider on reporting on wider asset management activity

Earlier this summer, the FCA published a package of reforms representing the most significant overhaul of the UK's asset management reporting and regulatory architecture since AIFMD was implemented in 2013, with proposals to tailor requirements proportionately for asset managers, cut costs for firms and give better data to supervise the sector more effectively. This post focuses on the FCA’s proposals to rebuild fund reporting as set out under FCA CP 26/26 (Fund Reporting for Asset Management Entities (FRAME)).  Other elements of the package of reforms are:

• CP26/28 – a consultation to change the regulatory framework for alternative investment fund managers (AIFMs) in the UK, most notably by establishing a new 3-tier structure (small, medium, and large) to update size thresholds and scale the rules more proportionately to a firm’s risks. The consultation accompanies the Treasury’s parallel consultation for draft Alternative Investment Fund Managers (AIFM) regulations, along with a policy note (among a few other amends, these HMT proposals broadly seek to facilitate the FCA replacing regulations with its own appropriate handbook rules). The implementation date currently envisaged for the new regime is 2028. You can find our blog post on the FCA CP and accompanying Treasury documentation here

• CP26/27 – a consultation which aims to simplify remuneration rules by replacing overlapping remuneration codes with a clearer, more proportionate framework. Our client note on CP 26/27 can be found here.

FRAME: The headlines

Under CP 26/26, The FCA’s goal is to transform how firms report information about funds they manage, by making the reporting more relevant to today’s market, simpler to compile, and more straightforward to submit.  They say that overall, their proposals “would reduce the reporting burden across the population of fund managers by 75%” – but of course as ever the devil is in the detail. 

• Broader than a simple Annex IV replacement: Whilst reporting in respect of certain (typically smaller) funds will no doubt be lighter touch, the nuanced approach that the FCA is taking will see reporting in respect of other (typically larger, or more complex) funds (including “hedge funds” and “loan origination funds”) changing or increasing under an “Enhanced Reporting” process.  UK UCITS management companies (in respect of UK UCITS) too are brought within scope and will see their regular reporting requirements increase.  From a practical perspective too, for firms reporting in respect of a variety of funds, depending on their fund reporting processes, and the approach to enhanced reporting, it may be that the proportionality benefit is not achieved. 

• Casting the net beyond fund level reporting: Aside from changes to fund level reporting, the FCA also plans to address gaps it sees in the regular information it receives about wider asset management activity.  The FCA highlights that many investment firms, including Collective Portfolio Management Investment (CPMI) firms operating in the asset management sector, undertake portfolio management and/or investment advice activity for institutional clients, with these firms comprising a large portion of the UK asset management landscape.  The FCA is therefore proposing that such firms will be subject to new streamlined annual reporting obligations which includes a short section on derivatives, borrowings, followed by a breakdown of funds under management (FUM) and assets under advice.  This will not replace the regulatory returns that such firms already submit based on their permissions and business model, and such firms will need to consider the proposals carefully to determine whether they are in scope.

The Detail

Scope

Broader than just AIFMs, the scope includes:

• FCA-authorised UK AIFMs: UK and non-UK AIFs that are managed in the UK by the AIFM.

• Managers of Registered Venture Capital Funds (RVECA) or Social Entrepreneurship Fund (SEF) managers: RVECA and SEF.

• UK UCITS management companies: UK UCITS.

• Third country AIFMs marketing in the UK under the NPPR: unauthorised AIFs marketed in the UK.

• Operators of recognised schemes: Overseas Fund Regime (OFR) and s.272 individually recognised overseas schemes.

• Some MiFID investment managers and advisers, including collective portfolio management investment firms.

• Operators of collective investment schemes.

Fund level reporting – Essential vs Enhanced Reporting

The centrepiece of FRAME is a two-tier reporting structure based on a fund's Net Asset Value (NAV). Essential Reporting applies to funds below £500 million NAV. This is intended to capture baseline, fundamental information.  On the FCA's own estimate, 90% of funds currently in scope of reporting will only be required to undertake Essential Reporting. Enhanced Reporting – applies to funds at or above the £500 million NAV threshold, building on Essential Reporting with substantially more granular data on investors, liquidity, portfolio composition and financing arrangements.

Reporting is quarterly or annually depending on the nature of the fund (for example, an authorised UK AIFM would need to report quarterly in respect of a hedge fund or authorised fund, and annually for other fund types).  Firms will need to pay close attention also to the time available to prepare a report after the end of a reporting period, as the lag time varies dependent on fund type (this is largely determined by liquidity – with the most common liquid f/actively traded funds having a shorter lag time)

The rules include provisions for:

• Opt-up – Firms can choose to provide Enhanced Reporting for funds below the £500m NAV threshold.  This should help firms manage fluctuations in the size of a fund.  It also allows firms to proactively select a single set of reporting requirements if they prefer to comply with a single consistent set of reporting requirements across all funds.

• Time cushion – where the NAV of a fund has crossed the £500m threshold as on the final business day of a reporting period, firms may continue to report in accordance with the requirements that applied for the previous reporting period, for one further cycle.  The time cushion is not applicable for a funds first annual/two quarterly reports. 

It is envisaged that in the context of master/feeder structures, the FCA’s supervisory focus is on the master fund, and so the FCA proposes to exclude feeder funds from ongoing reporting where the master fund is subject to FRAME reporting requirements.

Reporting requirements for specific fund types

The FCA is proposing to make reporting requirements as consistent as possible for different fund types, however there are exceptions:

• For UK UCITS that use Value at Risk to measure and manage global exposure additional reporting on the topic is set out in the Essential Reporting form

• For UK UCITS and NURS above the £500m NAV threshold, additional holdings reporting requirements are proposed.  This will be particularly significant for UK UCITS that are not used to reporting on holdings.  Additional reporting in respect of share classes and benchmarks, and performance and flows will apply. 

• Specific reporting requirements apply to private market funds, loan origination funds and private equity funds, respectively that need the NAV threshold for Enhanced Reporting.  The FCA here is recognising the evolution of capital flows to private markets, and the need for a tailored approach to ensure that it receives the data it needs.  Fund managers will select the appropriate descriptive classification for their fund based on the FCA handbook definitions for such funds (the definition for loan origination funds broadly mirrors the AIFMD II concept)

MiFID investment firms, including Collective Portfolio Management Investment firms: a new annual reporting requirement

One proposal set out in the CP, and somewhat buried in the detail, is a new reporting requirement for those that fall within the FCA’s definition of a “segregated portfolio manager or advisor” (SPMA).   Un like in the case of FRAME reporting more generally, the focus here is on the activities of a UK investment manager/advisor rather than the underlying fund.

The information gap the FCA is seeking to target here is in respect of the activities of certain UK MIFID investment firms undertaking portfolio management and/or investment advice across a wide range of products, including UK and overseas funds (often on a delegated basis), as well as segregated mandates for institutional and wholesale clients – work the FCA sees as being a vital part of the UK asset management industry.  Existing reporting requirements provide useful information, but not a consistent or comprehensive view of the firms’ business models or activities across different services, clients, and geographies (particularly given that existing reporting is fragmented and primarily derived from a combination of firm-level returns (such as FSA038 which captures high-level AUM and client metrics), transaction reporting obligations under MiFIR, and prudential reporting under the IFPR (including the annual MIF007 ICARA questionnaire). The information gap is particularly acute where UK-based firms manage or advise on non-UK funds or serve non-UK clients, leading to a gap in understanding of the wider asset management sector.

The proposal is for a stand-alone SPMA return (which would not replace existing reporting obligations) focused on the portfolio management and investment advice related activities of the firm, with firms reporting the following data:

• The gross notional amount of derivatives 

• the gross market value of long and short positions in other investments

• (for assets managed under discretionary mandates) FUM for any fund that managed by an overseas AIFM or an overseas operator of a fund and that is not marketed in the UK. A second section requires a breakdown of FUM by client type (including a breakdown of those clients as UK and non-UK clients) – excluding any funds managed under delegation from clients (e.g. UCITS, AIFs, CIS).

• (for assets under advisory mandates) a break-down of the value of any assets advised on across fund types and portfolios.

Whilst this data may exist within firms’ systems, the challenge for in scope firms will be to build the data extraction and governance and reporting processes to ensure readiness for the rules going live.  There is a question too of whether there will be duplication of data received by the FCA (for example where a firm’s client is a UK fund separate FRAME reporting is being undertaken in respect of that fund) – this is not a point that the FCA has commented upon in their CP. 

Collective Investment Schemes

Operators of certain types of Collective Investment Schemes (CIS) do not currently report information to the FCA about these schemes. The CP proposes that firms with relevant permissions would be required to submit a short annual report regarding the size, type and number of CIS.

FRAME Templates

Alongside the consultation, the FCA has published 3 reporting templates that represent the data it proposes to collect from managers and operators of different types of fund (noting these are a visual representation of the proposals and do not reflect the user interface for reporting)

• FRAME reporting template (XLSX)
• Collective Investment Schemes (CIS) reporting template (XLSX)
• Segregated portfolio manager and adviser reporting template (XLSX)

The FCA has also created a version of our proposed essential reporting requirements as an online form that firms can test on a voluntary basis.

Timing

The consultation has been extended and now closes on 22 October 2026, to give interested parties time to respond.  A policy statement with final rules will follow in the first half of 2027, and the FCA intend for the reporting regime to be fully implemented in 2028 (a very short timeframe for firms to prepare their systems for the new regime).