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.

Summary

The CP proposes targeted changes to the UK authorised funds regime to address growing concerns among depositaries about holding legal title to non-custodial private markets assets, in particular immovables and limited partnership interests.

The aim of the changes is to promote the ability of UK authorised AIFs - Long-Term Asset Funds (‘LTAF’), Non-UCITS Retail Schemes (‘NURS’) and Qualified Investment Schemes (‘QIS’) - to invest in private markets assets while maintaining an appropriate level of investor protection and supporting UK growth and competitiveness.

The proposed rules would see depositaries retain liability in relation to these assets, whilst allow them to delegate their COLL registration function to a person within the same group (‘affiliated’) of the Authorised Fund Manager (‘AFM’). This delegation cannot be to the AFM itself. However, whilst the FCA does not mandate the structure to be used, the CP does note that the FCA assume firms will likely set up dedicated SPVs for this purpose, whilst the rules do not prevent the SPV from being controlled by the AFM.

The restriction to only allow the depositary to only delegate to affiliates of the AFM will have implications for ‘host AFMs’ who delegate investment management to third party managers. The FCA are prevented from amending their rules to allow OEICs to hold legal title to these assets by the OEIC Regulations as the FCA do not consider an OEIC to be a ‘third party’. Host AFMs may therefore want the OEIC Regulations to be amended to allow OEICs to hold legal title to such assets, although this will require change to legislation that would take longer to introduce.

Timing

The FCA have not given an expected timeframe for the proposed changes. Instead, they ask respondents to say whether they want these proposed targeted changes made sooner, or would prefer to wait for the FCA to make these as part of the planned wider FCA ‘repeal and replace’ process of the rules applicable to authorised funds. We expect the response will be for an immediate change to the rules.

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

Details of proposals

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.