FCA CP26/16: FCA plans new delegation model for private AIF assets

On 21 May 2026, the FCA published Consultation Paper CP26/16 (the CP) on the registration of authorised fund assets.

The CP proposes targeted changes to the UK authorised funds regime to address growing concerns among depositaries about holding legal title to certain private markets assets.

The aim of the changes is to promote the ability of UK authorised AIFs to invest in private markets assets while maintaining an appropriate level of investor protection and supporting UK growth and competitiveness.

As part of this, the FCA is proposing to change its rules, which currently prevent the depositary of an authorised AIF managed by a full-scope UK AIFM from delegating its registration function under the rules in COLL (‘the COLL registration function’) in respect of assets that are not safe custody investments or AIF custodial assets.

Under FSMA and the OEIC Regulations, depositaries are responsible for the safekeeping of all scheme property and must ensure that assets in registered form are registered in

• the depositary’s own name
• that of a controlled nominee or
• that of another permitted person.

In practice, the current rules mean that for certain private markets assets, notably UK commercial real estate and some partnership interests, the depositary or its controlled nominee must either hold legal title or be the partner of record.

Recent legislative developments have significantly increased the potential criminal, financial and reputational liabilities for legal owners of UK buildings and, in some cases, their directors and managers. Although a depositary does not control investment or asset management decisions, it is still exposed to such “ancillary” risks because it holds title. The FCA notes that some depositaries are becoming increasingly unwilling to take on or retain these risks – this threatens the availability of depositary services and, as a result, the ability of authorised AIFs to invest in UK real estate and other long‑term private markets assets.

To address this, the CP proposes amendments to AIFMD‑derived and related Handbook rules to:

• Allow depositaries of authorised AIFs managed by AFMs that are also full‑scope UK AIFMs to delegate
  • their COLL registration function for assets that are not safe custody investments or AIF custodial assets (for example, immovables such as real estate and partnerships that are not collective investment schemes), and
  • both the COLL registration function and the CASS 6 custody function for assets that are safe custody investments but not AIF custodial assets.
• Permit delegation of the COLL registration function for non‑custodial private markets assets (including real estate and non‑CIS partnerships) only to “affiliates” of the AFM (entities in the same group), with additional structural and legal protections, including requiring that the affiliate
  • holds the assets on trust for the depositary,
  • maintains appropriate records,
  • cannot transfer legal title to the assets, or transfer control of itself, without the depositary’s consent, and
  • is subject to arrangements validated by external legal advice. For UK immovables, the delegate must also be a UK company subject to the Companies Act 2006.
• Allow depositaries to delegate custody of safe custody investments that are not AIF custodial assets to regulated third‑party custodians under CASS 6.3, while retaining the existing AIFMD framework for AIF custodial assets
• Align the COLL registration regime for authorised AIFs with small UK AIFMs to the full scope model for non custodial assets, limiting delegation to AFM affiliates and applying the same protections. The CP also proposes to remove an existing derogation that currently reduces depositary liability for certain delegations in the QIS context
• Clarify the operation of the COLL registration function rules and their interaction with CASS 6. Among other things, the FCA proposes to
  • confirm that references to a depositary’s “nominee” in the COLL registration rules, for assets that are neither safe custody investments nor AIF custodial assets, mean a controlled nominee of the depositary,
  • restrict circumstances in which safe custody investments can be registered in the depositary’s own name to units in partnership CIS that are not AIF or UCITS custodial assets, and
  • amend CASS 6 to make clear when depositaries must follow AIFMD/UCITS delegation provisions and when they must comply with CASS 6.3 for delegation of custody, including for safe custody investments that are not AIF/UCITS custodial assets.
• Confirm that a UCITS AFM cannot act as a delegate for the depositary for any task, to reinforce the separation of manager and depositary functions and avoid conflicts of interest
• Replace the long‑standing modification by consent to COLL 5.6.22R (which disapplies COLL 5.5.9R on guarantees and indemnities in certain circumstances) with a permanent rule change. This will allow NURS ICVCs and depositaries, subject to conditions, to give guarantees and indemnities backed by scheme property where required in connection with the acquisition of immovables, for example in standard UK commercial real estate transactions.

The draft Collective Investment Schemes (Registration of Assets) Instrument 2026, which would amend the Glossary, CASS, COLL and FUND to implement these proposals, is included in Appendix 1 to the CP.

Responses to the CP should be submitted by 9 July 2026.