Private Funds View – September and October

Welcome to the September and October edition of Private Funds View, summarising key UK and EU regulatory developments for private fund sponsors. 

We hope you find it a useful tool to keep on top of key private fund regulatory topics and updates. These are high-level summaries - for further information, follow the embedded links or reach out to one of the team.

Please do let us know if you have colleagues who would like to be added to our distribution list. 

Topics in this edition:                                           

1. FCA conflicts of interest survey

2. Consultation on the Senior Managers and Certification Regime

3. Third round of RIS trilogues

4. European Commission delay of Level 2 acts

5. ESMA 2026 Work Programme

6. ESMA Final Report on open-ended loan-originating AIFs under AIFMD 2

7. AIFMD 2 Luxembourg implementation

8. BlueCrest agrees to $101mn redress after long-running battle

9. AMF fines private equity manager €1.3mn for regulatory breaches

10. EU to ban Member States from restricting cross-border ELTIFs

Main Topics

1. FCA conflicts of interest survey

The FCA has now issued its conflicts of interest of survey to selected respondents with a deadline of 2 January 2026 for completion of the survey. The FCA's survey focuses on understanding industry practices regarding conflict governance, oversight, and management frameworks.

We are assisting a number of firms with this survey and are happy to assist should your firm be in scope.

2. Consultation on the Senior Managers and Certification Regime

Consultations closed on 7 October 2025 for HM Treasury, the FCA, and the PRA's consultation papers proposing changes to the SMCR. The proposals are broadly split into two:

• Phase 1 which can be described as proposed tweaks by the FCA to the regime with the aim of reducing its administrative burden/operational complexity in the short to medium term. Proposals include making the 12-week rule more flexible, clarifying the scope of certain SMF roles, proposing changes to the Enhanced SMCR firm thresholds, and giving guidance on who to allocate prescribed responsibilities to, among other things.  
• Phase 2 is a more meaningful change in the form of removing granular SMCR requirements from FSMA 2000 and giving the FCA and PRA more flexibility to create a more proportionate regime that supports the government's simplification, growth, and competitiveness agenda.

Phase 1 final rules will likely be published mid-2026.

3. Third round of RIS trilogues

In a series of Retail Investment Strategy (RIS) trilogues, including the third round on 23 September 2025, and the fourth on 21 October 21 2025, negotiators have narrowed positions on some key issues while remaining divided on others. Provisional agreements have been reached on client categorization and undue costs, but significant disagreements remain regarding value for money (VfM), inducements, and elements of the client journey. 

The next trilogue, scheduled for 25 November 2025, is expected to continue discussions on these contentious areas, with the Danish Presidency (PCY) pushing to finalise the Level 1 text by the end of 2025, with rules potentially coming into effect in 2027.

4. European Commission delay of Level 2 acts

The European Commission announced it will delay the adoption of certain Level 2 acts in response to concerns about the volume of upcoming measures. Out of 430 planned Level 2 acts, 115 have been categorised as "non-essential" and will not be adopted before 1 October 2027. Where legal deadlines exist, the Commission intends to amend or repeal them during future revisions of the main (Level 1) legislation.

The non-essential Level 2 acts cover a range of regulations within the financial services sector. Notable impacted areas and examples include: 

• Sustainable Finance Disclosure Regulation (SFDR): Revised regulatory technical standards (RTS) expected in early 2024 have been delayed due to the ongoing review of the SFDR.
• European Sustainability Reporting Standards (ESRS): Postponement of delegated acts that would provide for ESRS for listed small and medium-sized enterprises (SMEs) and other sector-specific standards.
• Alternative Investment Fund Managers Directive (AIFMD II) and UCITS review: Some non-essential Level 2 measures related to these directives will be delayed.
• Markets in Financial Instruments Directive (MiFID): Some delegated acts under MiFID are included in the delay.

5. ESMA 2026 Work Programme

On 3 October 2025, ESMA published its annual Work Programme. The key priorities outlined in the programme are:

• Supporting the SIU: ESMA will align with the European Commission's Saving and Investments Union Strategy by harmonising supervisory practices, improving market data, and contributing to reforms for a more integrated and competitive EU financial system. It will also promote digitalisation and clearer disclosures.
• Legislative Focus: ESMA will continue implementing major legislative files such as EMIR 3 and ESAP, and may address other ongoing files like the Retail Investment Strategy, PRIIPS, SFDR, and Securitisation Regulation.
• Data and Innovation: ESMA will enhance data capabilities through projects like the ESMA Data Platform and AI-powered supervisory tools, supporting risk-based and data-driven supervision.
• Digital Finance: ESMA will focus on the effective implementation of MiCA, especially regarding crypto-asset service providers, and will help coordinate the transition to a T+1 settlement cycle by October 2027.

6. ESMA Final Report on open-ended loan-originating AIFs under AIFMD 2

On 21 October 2025, ESMA published its Final Report on open-ended loan-originating AIFs. While the Report itself was published, the overall implementation of the Level 2 measures is impacted by a broader European Commission delay of "non-essential" financial services rules until at least October 1, 2027 (see above).

The Final Report introduces various changes to the draft RTS, including:

• Liquidity requirements: The final RTS remove the initially proposed fixed liquidity buffer, instead requiring AIFMs to ensure sufficient liquidity based on the fund's expected loan cash flows. Expected loan cash flows can now be counted as liquid assets.
• Stress testing frequency: The minimum frequency for liquidity stress testing has been reduced from quarterly to at least annually, acknowledging that more frequent testing may be disproportionate for most managers.
• Scope clarification: The RTS were revised to apply to AIFMs that "manage" loan-originating AIFs, rather than those who "intend to manage" them, clarifying that no new pre-authorisation requirement is being introduced. 

7. AIFMD 2 Luxembourg implementation

On 3 October, 2025, Luxembourg's Parliament received Draft Bill No. 8628, initiating the transposition of Directive (EU) 2024/927 (AIFMD 2) into national law. The bill amends existing laws for AIFMs and UCITS management companies, expanding permitted services, establishing rules for loan-originating AIFs (with a prohibition on consumer loans to Luxembourg residents), and clarifying delegation and substance requirements. The draft legislation also authorizes additional liquidity management tools for AIFs and UCITS and includes an auditor report exemption for contributions in kind. The full text of Draft Bill No. 8628 is available to review.

Please see this Simmons article here for further information on this update.

8. BlueCrest agrees to $101mn redress after long-running battle

In October, BlueCrest Capital Management agreed to pay $101mn in compensation to investors after reaching a settlement with the FCA at the end of a lengthy legal battle over conflicts of interest. BlueCrest was fined £40.8mn by the FCA in late 2021 for transferring portfolio managers to a fund that was exclusively available to its own staff. The regulator then demanded that the alternative asset manager pay over $700mn in compensation to investors. 

9. AMF fines private equity manager €1.3mn for regulatory breaches

In September 2025, the AMF announced fines on Altaroc Partners and its directors of €1.3 million for regulatory breaches. Altaroc was fined €600,000, with directors Maurice Tchenio and Patrick de Giovanni fined €500,000 and €200,000 respectively.

The AMF investigation of Altaroc Partners found the following:

• Failure to verify that lenders to the funds it managed were authorised to carry out lending activities.
• Failure to carry out its management company activities in "an honest, loyal and professional manner with the required skill, care and diligence".
• Several deficiencies in its commercial documentation, and failure to demonstrate that rebates paid to distributors for marketing the Altaroc Global fund range had improved the quality of the service provided to clients.
• Failure to carry out due diligence checks to prevent the risk of its funds being used for money laundering and terrorist financing.

10. EU to ban Member States from restricting cross-border ELTIFs

In October 2025, the European Commission announced it is drafting a Q&A document to clarify that EU member states are not allowed to restrict access to ELTIFs from other member states. In particular, the Q&A will make clear that national authorities cannot prevent foreign ELTIFs from being included in insurance products, pension schemes, or savings plans. This initiative is intended to remove national barriers and promote a more unified investment market across the EU.

Best of the rest

11. The Central Bank of Ireland publishes Markets Update No 5 of 2025

On 9 September 2025, the Central Bank of Ireland published its regular Markets Update setting out proposed changes to Ireland's UCITS and AIF rules and updates to ELTIF authorisation. These updates can be viewed as part of the Central Bank's plans to position Ireland to compete more effectively with Luxembourg in the illiquid and semi-liquid fund space.

12. Companies 'over-interpreting' consumer duty rules, says FCA

The FCA has observed that some financial services firms are over-interpreting the Consumer Duty rules, and is now advocating for a more proportionate application. The FCA's message emphasises that the main goal of the duty is to deliver good outcomes for consumers, and overzealous compliance can create unnecessary burdens and even harm for customers through added costs. The FCA is working to provide clearer guidance to help firms focus on this core objective.

13. FCA looking much more closely at how firms manage private markets transition risks

At the Investment Week Private Markets Summit, Nike Trost of the FCA outlined the regulator's increased scrutiny of private markets as they open to a broader investor base, focusing on governance, valuation practices, conflict management, and liquidity risks.

14. LSEG rolls outs blockchain-based platform for private funds

On 15 September, the London Stock Exchange Group (LSEG) announced its completion of its first transaction on a newly launched blockchain-based infrastructure platform for private funds.

Developed in partnership with Microsoft, the Digital Markets Infrastructure platform supports end-to-end transactions, including issuance, settlement, and servicing. Initially, the platform will be used by private funds, with plans to expand to other asset classes in the future.

15. UK appointed representative reforms risk 'moral hazard', says Treasury

The UK Treasury has put forward plans to bring the activities of appointed representatives under the remit of the Financial Ombudsman Service (FOS), with the aim of enhancing consumer protection. Industry stakeholders have expressed concern that this proposed change risks creating moral hazard and giving retail investors a false sense of security.

16. Rachel Reeves tells private equity bosses she plans to shut down more regulators

At the British Private Equity & Venture Capital Association, Chancellor Rachel Reeves announced plans to further reduce the number and influence of UK regulators, following her recent decisions to replace the chair of the Competitions and Markets Authority, shut down the Payment Systems Regulator, and "severely" constrain the Financial Ombudsman Service.

17. AMF proposes ESMA as central financial markets regulator

The AMF has set out proposals on how to establish more effective supervision of the European financial markets, particularly on the role of ESMA to play a greater role in ensuring consistency in supervisory practices and exercising direct supervision over large, cross-border entities, such as pan-European market infrastructures, global crypto-asset service providers and large asset management groups.

18. FCA IFPR newsletter - expectations for IFPR

The FCA has issued the September 2025 IFPR newsletter, setting out its expectations on issues relating to the Investment Firms Prudential Regime (IFPR). Key considerations include Investment firm groups, limited liability partnerships, calculation of K-factors and Internal Capital Adequacy and Risk Assessment (ICARA) and MIF007 reporting.