Private Funds View - July 2026

Welcome to the July 2026 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:             

UK

1. FCA simplifies consumer MiFID investment disclosures
2. FCA and HMT launch consultations on new UK AIFM regime
3. FCA findings on financial crime systems and controls
4. FCA findings on review of firm’s approaches to monitoring consumer outcomes

EU

1. SFDR 2.0 – Delay of ECON Committee vote on Parliament’s negotiating position
2. ESMA Common Supervisory Action on risk management function

Best of the Rest – HMRC v Bluecrest Capital Management (UK) LLP — Supreme Court Decision | EFRAG publishes State of Play Report on ESRS reporting | Ireland’s 2026 EU Presidency: Financial services priorities | AMLA prepares for direct supervision | EU expands sanctions measures against Russia | ESG ratings Delegated Regulations

Main topics

UK

1. FCA simplifies consumer MiFID investment disclosures

2 July 2026. The FCA published CP26/24 on simplifying consumer investment disclosures. The proposals would align existing MiFID disclosure requirements (e.g. on costs and charges) with the new Consumer Composite Investments (CCI) regime, streamline overlapping disclosure frameworks and simplify how investment costs are presented to consumers.

Consultation closes on 21 August 2026.

While primarily aimed at retail investment products, the consultation reflects the FCA's broader shift away from prescriptive EU-derived disclosure rules towards a more outcomes-focused, Consumer Duty-led approach. Firms with retail-facing products should expect continued simplification of disclosure requirements, coupled with increased emphasis on whether consumers understand the information they receive. The rule changes directly impact MiFID firms with retail clients (e.g. distributors).

2. FCA and HMT launch consultations on new UK AIFM regime

14 July 2026. The UK asset management regime is set for its most significant overhaul since Brexit. On 14 July 2026, the FCA and HM Treasury launched a coordinated package of consultations intended to create a more proportionate, growth-focused and internationally competitive framework for fund managers, while maintaining core investor protection and market integrity standards.

Taken together, the proposals would transfer much of the detailed AIFM regime from legislation into FCA rules, allowing the framework to evolve more quickly than the current legislative model.

The key consultations close between September and October 2026. We expect the rules to be in force in 2028.

Summary of key proposals here below:

• A central theme of the reforms is proportionality.
• The UK national private placement regime will be retained and regulatory reporting requirements will be simplified, providing welcome continuity for non-UK managers marketing into the UK.
• The FCA is moving away from a "one size fits all" approach, with smaller managers benefiting from a lighter-touch framework, while requirements increase according to a firm's size and risk profile.
• A new three-tier AIFM categorisation framework, with proposed thresholds of £750 million NAV for small firms and £5 billion NAV for large firms, replacing the current full-scope/small authorised AIFM distinction.
• The FCA is proposing to update and amend many of the key rules applicable to UK AIFMs, including valuation, leverage, risk management, liquidity management, delegation and investor disclosure. The application of many of these rules will differ significantly, depending on the category of firm.
• The existing AIF001 and AIF002 FCA AIF reporting regimes will be scrapped and replaced with the new “FRAME” regime.
• FRAME will have two tiers of reporting: “essential” and “enhanced” (with a per fund threshold of above £500m NAV to trigger enhanced reporting for that fund).
• A streamlined and simplified remuneration regime for UK asset managers and other solo-regulated firms. The FCA proposes replacing the three existing remuneration codes (AIFM, UCITS, MIFIDPRU) with a single consolidated code, moving from prescriptive rules to an outcomes-focused approach. Helpful for groups applying overlapping requirements across UK entities, though the FCA will still focus on whether remuneration structures support effective risk management and alignment with investor interests. Greater flexibility over matters such as deferral, malus and clawback arrangements.

This is the most significant UK private funds regulatory development of 2026 so far. Sponsors with UK AIFMs should assess which proposed category their UK AIFM would fall within, identify areas where the reforms could affect operating models, governance and reporting arrangements, and consider responding to the consultations. The proposals also reinforce the increasing divergence between the UK and EU AIFM regimes, particularly as AIFMD II implementation progresses across the EU.

For more information see our full update here, covering CP26/28 (The UK AIFM Regime), CP26/26 (Fund Reporting for Asset Management Entities (FRAME)), CP26/27 (Remuneration: Solo-regulated firms' rules reform) and HM Treasury's (HMT) AIMFR policy note.

3. FCA findings on financial crime systems and controls

22 July 2026. The FCA has published findings from a review of financial crime controls at asset managers and alternative investment firms.

The FCA found that, while many firms had established financial crime control frameworks, weaknesses remained in areas including risk assessments, customer due diligence, beneficial ownership identification, ongoing monitoring and governance arrangements. Examples of good practice included regularly reviewed business-wide risk assessments, risk-based controls tailored to firms' activities and customer profiles, and the use of governance processes and management information to support effective oversight of financial crime risks.

Private fund sponsors should review their controls against the FCA's examples of good and poor practice, as the FCA intends to continue focusing on these areas through supervision. The FCA noted that firms active in private markets are exposed to heightened financial crime risk, particularly due to customers with complex ownership structures, PEP exposure and international fund flows. The FCA also highlighted shortcomings at some private market firms in their business wide and customer risk assessments, as well as customer due diligence and beneficial ownership verification processes.

For further insight into recent AML and FCA enforcement developments, see our publication here.

4. FCA findings on review of firm’s approaches to monitoring consumer outcomes

27 July 2026. The FCA has published findings from a review of how firms monitor customer outcomes under the Consumer Duty. The regulator found that the strongest approaches were evidence-based, used forward-looking management information and linked monitoring directly to customer outcomes, while weaker approaches lacked clear governance, meaningful metrics and effective challenge from boards.

Sponsors with retail products, wealth management businesses or consumer-facing distribution channels should review governance, management information and customer outcome monitoring frameworks against the FCA's examples of good and poor practice.

EU

1. SFDR 2.0 – Delay of ECON Committee vote on Parliament’s negotiating position

2 July 2026.The ECON Committee vote on its SFDR 2.0 amendments, scheduled for 15 July 2026, was delayed with reporting indicating MEPs were unable to reach a compromise. Once ECON votes, a plenary vote is expected to follow in September 2026 and trilogues expected in early Q4 2026.

Key features of the Parliament position include extending the overall application date to 24 months after entry into force, while burden-reducing measures (including removal of entity-level PAI and remuneration disclosures) would take effect from entry into force.

The delay signals continuing political friction over the three-category regime.

For our analysis of the proposed SFDR 2.0 changes and their impact on asset managers, see here.

2. ESMA Common Supervisory Action on risk management function

3 July 2026. ESMA announced a new Common Supervisory Action (CSA) examining the risk management function of AIFMs (as well as UCITS mancos) across the EU. This follows the May 2026 publication of findings from the 2025 CSA on compliance and internal audit functions, which identified recurring deficiencies in resourcing, tailoring of group policies, and oversight of third-party compliance arrangements. The review will be conducted throughout 2026 and 2027 in conjunction with national competent authorities. ESMA intends to publish a final report in 2028.

The CSA will focus on the effectiveness, independence and expertise of risk management functions. National regulators will assess governance and organisation, risk identification and monitoring processes, and reporting to senior management and governing bodies.

The initiative demonstrates continued supervisory focus on governance and control functions within EU asset managers. AIFMs may wish to review risk management frameworks, reporting structures and board oversight arrangements against likely supervisory expectations.

Best of the Rest

HMRC v Bluecrest Capital Management (UK) LLP — Supreme Court Decision

1 July 2026. The Supreme Court handed down its judgment in this closely watched tax case involving the characterisation of carried interest and profit allocations within fund management LLPs. The decision will have implications for the structuring of remuneration and profit-sharing arrangements in private fund management groups.

For more information see our full update here.

EFRAG publishes State of Play Report on ESRS reporting

1 July 2026. EFRAG published its State of Play 2026 report, analysing more than 900 sustainability statements prepared under the ESRS framework. The report suggests that sustainability reporting practices are beginning to mature, with climate change, workforce and business conduct continuing to be the most identified material topics.

For private fund sponsors, climate transition planning, robust double materiality assessments and demonstrating how ESG priorities are embedded into governance and decision-making are emerging as key areas of focus.

Ireland’s 2026 EU Presidency: Financial services priorities

1 July 2026. Ireland assumed the Presidency of the Council of the European Union for the period from 1 July to 31 December 2026. Financial services reform is a key priority, with a focus on progressing the Savings and Investments Union, the Market Integration and Supervision Package, securitisation reforms and the Digital Euro. The Presidency has also committed to advancing regulatory simplification and capital markets integration measures aimed at improving EU competitiveness.

These initiatives could impact the broader fundraising, distribution and operating environment for private fund managers across the EU.

AMLA prepares for direct supervision

21 July 2026. The EU Anti-Money Laundering Authority (AMLA) has published its final report on draft technical standards supporting its future direct supervision framework. From 2028, AMLA will directly supervise financial institutions that operate in at least six Member States and are assessed as presenting a high money laundering or terrorist financing risk, marking a significant shift in the EU's supervisory landscape.

While direct supervision will initially focus on a relatively small number of large cross-border firms, the new framework signals increasing regulatory focus on AML governance, risk management and supervisory consistency across the EU. The standards set out how AMLA and national supervisors will coordinate supervision and select firms for direct oversight.

Cross-border managers should continue reviewing AML frameworks, governance arrangements and customer due diligence processes in anticipation of increasingly harmonised supervisory expectations under the EU AML package.

EU expands sanctions measures against Russia

23 July 2026. The Council of the EU has adopted its 21st package of sanctions against Russia, introducing 218 new designations and expanding restrictions across the financial services sector. Measures include asset freezes on 94 Russian financial institutions, transaction bans on a further 33 institutions, and new powers to restrict transactions with crypto-asset providers that facilitate sanctions evasion.

Private fund managers should review sanctions screening, investor onboarding, counterparty due diligence and monitoring processes to ensure exposure to newly sanctioned entities is identified and restricted.

ESG ratings Delegated Regulations

The European Commission has published four Delegated Regulations supplementing the ESG Ratings Regulation.

On 28 July 2026, the following regulatory technical standards (RTS) were published:

• Commission Delegated Regulation (EU) 2026/871, specifying the elements of ESG rating products to be disclosed to the public and to users of ESG ratings, rated items and issuers of rated items; and
• Commission Delegated Regulation (EU) 2026/872, specifying the measures and safeguards to be implemented by ESG rating providers to separate their ESG rating activities from their other activities.

Both enter into force on 17 August 2026 and apply retrospectively from 2 July 2026, to align with the application date of the ESG Ratings Regulation.

On 30 July 2026, two further Delegated Regulations were published covering supervisory fees and penalties:

• Commission Delegated Regulation (EU) 2026/904, setting out rules of procedure on fines and periodic penalty payments imposed on ESG rating providers by ESMA; and
• Commission Delegated Regulation (EU) 2026/910, setting out fees charged by ESMA to ESG rating providers.

Delegated Regulation 2026/910 (fees) applies from 31 July 2026. Delegated Regulation 2026/904 (penalties) applies from 19 August 2026.