FCA CP25/35: Extended Transition Period for COLL 5 Concentration Rules

What’s new?

On 5 December 2025, the FCA published CP25/35 (Quarterly Consultation No. 50) (the Consultation) which includes a proposal to extend the transitional period for the COLL 5 concentration rule.

By way of background, this follows Handbook Notice 126 (the Notice) and Handbook Instrument FCA 2025/1 (the Instrument), which took effect on 31 January 2025 with a 12-month transitional period due to expire on 30 January 2026.

For more information on the changes made to the COLL 5 Rules by the Notice and the Instrument, please see our Insights article here.

What is the FCA proposing?

The FCA is proposing to extend the transitional period by a further year to 31 January 2027.

The extension is considered necessary as the FCA received feedback that the rule changes to COLL 5.2.30R(1)(c) and COLL 5.2.29 R(3), which relate to the concentration of units in other collective investment schemes that may be held by a UCITS, do not work and should be simplified. We suspect that feedback will mainly focus around the mechanics and practical application of COLL 5.2.29R(3) and 5.2.30R(1)(c). For example, based on our experience working with fund management groups, we can see how the “in-house” exemption to the 25% limit could be viewed as having been drafted too narrowly – applying only where both funds are managed by the same AFM entity (with delegation as applicable to the same firm). This exemption will not necessarily be helpful for common group structures of international fund management groups where different fund and portfolio management entities are used to manage in-house fund ranges.

This extension of the transitional period is intended to provide additional time for the FCA to consult on and implement more substantive amendments to the COLL concentration rules than those originally introduced.

Next Steps

Subject to the outcome of the Consultation, the FCA aims to bring this extension into force before the current transitional period expires on 30 January 2026.