Private Funds View - August 2026

Welcome to the August 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 to hold prudential reform roundtable for UK AIFMs
2. FCA increases scrutiny on Annex I firms
3. FCA private securitisation survey
4. FCA Primary Market Bulletin No. 65
5. SM&CR: Non-financial misconduct rules now live

EU

1. Luxembourg: Statutory compartmentalisation proposal for Luxembourg partnerships
2. ESMA advice sought on the Retail Investment Strategy

Best of the Rest – PS26/15: Improving the UK transaction reporting regime | FCA webpage on climate adaptation and resilience | FCA fines and bans asset manager directors | ESG Ratings Regulation: Commission publishes application regime | Cayman Islands: CIMA finalises new AML/CFT/CPF and sanctions rules | Singapore: Proposals for enhanced tax incentives | US: Regulators push back Form PF deadline

Main topics

UK

1. FCA to hold prudential reform roundtable for UK AIFMs

4 August 2026. The FCA updated its webpage for CP26/28 on the UK AIFM Regime to provide details of its planned prudential roundtable for fund managers. Firms wishing to participate were required to register their interest via email by 31 August 2026 and may also submit questions for discussion in advance.

The roundtable follows the FCA's wider programme of reforms to the UK AIFM regime, including proposals to introduce a new three-tier AIFM categorisation framework and more proportionate prudential requirements.

For further analysis on the UK AIFM regime changes, see our article here.

2. FCA increases scrutiny on Annex I firms

7 August 2026. The FCA has issued information requests to approximately 900 ‘Annex 1’ firms to enhance its understanding of their activities, business models and risks. These include entities originating loans, but not separately authorised by the FCA, which have to register with the FCA for anti-money laundering and combating the financing of terrorism purposes as an ‘Annex 1 financial institution’.

The FCA has also published a statement highlighting financial crime risks it has identified across Annex 1 firms generally). The risks that the FCA has identified relate to the potential for these firms to facilitate financial crime, including over-reliance on the financial controls of a parent company or on off-the-shelf processes designed for different types of business. The FCA stresses that firms must assess for themselves whether their controls are suitable for their particular risks, governance and activities, and has raised concerns that unregulated lending through complex structures is increasing risks to consumers and markets.

The FCA has also increased its scrutiny of applications for Annex 1 registration and cautioned that applications may take longer to process than usual.

Private fund sponsors conducting lending, financing or other activities through Annex 1 entities should ensure that compliance frameworks are tailored to the specific risks of the relevant business rather than relying solely on group-wide policies and procedures.

3. FCA private securitisation survey

August 2026. The FCA has launched a supervisory review of selected private securitisations to improve its understanding of recent activity in the UK private securitisation market. The initiative signals increased supervisory scrutiny of compliance with UK securitisation reporting requirements and highlights the importance of maintaining robust transaction records, investor reporting processes and notification procedures.

Private fund sponsors and other market participants involved in private securitisations may wish to review the completeness and quality of their securitisation-related reporting and disclosures (such as transaction summaries and investor reports), as well as governance processes in anticipation of regulatory engagement.

4. FCA Primary Market Bulletin No. 65

28 August 2026. The FCA published Primary Market Bulletin 65, which covers a range of topics, including regulatory announcements, sponsor due diligence and delayed disclosure of inside information under UK MAR.

While not directed specifically at private fund sponsors, the publication serves as a reminder of the regulator's increasing emphasis on transparency, governance and investor communications. Sponsors considering exits, IPOs or public market transactions may wish to monitor the FCA's developing expectations in these areas.

5. SM&CR: Non-financial misconduct rules now live

1 September 2026. The FCA's new non-financial misconduct rules have now come into effect for firms subject to the Senior Managers and Certification Regime (SM&CR). The reforms clarify how conduct such as bullying, harassment, violence and other serious misconduct may be taken into account when assessing conduct rule breaches and fitness and propriety.

Fund sponsors should ensure that disciplinary, whistleblowing, HR and conduct frameworks are aligned, and that fitness and propriety assessments appropriately capture relevant non-financial misconduct issues.

EU

1. Luxembourg: Statutory compartmentalisation proposal for Luxembourg partnerships

30 July 2026. The Luxembourg Parliament received Bill 8814, which would extend statutory compartmentalisation to certain unregulated Luxembourg partnerships (SCS and SCSp) qualifying as AIFs and managed by an AIFM fully authorised in Luxembourg or another EU Member State. If enacted, the proposal would allow managers to launch segregated compartments for different strategies, vintages, investors, or assets while maintaining statutory segregation of assets and liabilities between compartments.

For sponsors using Luxembourg partnership structures, the reforms could reduce the need to establish a separate partnership for each pool or to apply a RAIF product-law wrapper, streamline governance and administration, and provide a more scalable platform for multi-strategy and asset-specific products. Note that the proposal has not been enacted into law yet and may still evolve during the parliamentary process.

For a more detailed analysis on the proposals, see our article here.

2. ESMA advice sought on the Retail Investment Strategy

24 August 2026. The European Commission published a call to ESMA for technical advice on Level 2 measures under the Retail Investment Strategy. The advice covers five areas:

• Value for money: a single framework running across MiFID II, the UCITS Directive and the AIFMD, with ESMA to set the criteria for grouping comparable products and for identifying those whose costs are out of proportion to what investors get in return.
• Inducements: a reworked test, with ESMA to advise on when a fee or benefit delivers something tangible for the client and when its level is proportionate.
• Suitability and appropriateness: narrowing what information firms must collect from clients, plus a new "simple advice" category confined to well-diversified, non-complex, cost-efficient products.
• The retail investor journey: stripping out requirements that are duplicative or no longer serve a purpose.
• Marketing communications: addressing social media, online advertising and "finfluencers".

ESMA’s advice is due by 1 October 2027. Final publication is expected in early 2027, with application from mid-2029.

The centrepiece for sponsors is likely to be the new value-for-money regime requiring fund manufacturers to benchmark costs, charges and inducements against ESMA-defined peer groups and to fix or withdraw "outlier" products. Sponsors should also note that a new inducements test will require any inducement to confer a tangible client benefit and be proportionate to value and service without impairing the best-interest duty, and that marketing rules will tighten.

Best of the rest

PS26/15: Improving the UK transaction reporting regime

3 August 2026. The FCA published a policy statement (PS26/15) setting out final transaction reporting rules that will replace and restate the retained EU law derived from MiFIR.

Headline changes include reducing transaction reporting fields, removing reporting obligations for around seven million instruments only tradeable on EU trading venues, exempting most corporate actions, and shortening the default back-reporting period from five years to three.

The rules take effect on 3 April 2028.

For more details on PS26/15 please see our article here.

FCA webpage on climate adaptation and resilience

4 August 2026. The FCA published information on climate adaptation and resilience, focusing on how physical climate risks may affect the property insurance and mortgage markets. Its message is also relevant to private fund sponsors with exposure to real estate, infrastructure, private credit and asset-backed financing.

Sponsors should consider whether physical climate risk is genuinely captured in valuation policies, underwriting criteria and risk registers, or whether it sits only within sustainability reporting.

FCA fines and bans asset manager directors for making false and misleading statements

14 August 2026. The FCA published final notices to former asset managers, Paul Taylor and Esmeralda Toni, after finding that they made false and misleading statements connected with claims of ownership of a bond portfolio worth more than EUR200 million. The FCA found breaches of individual conduct rule 1.

Both individuals were prohibited from performing functions relating to regulated activities and were fined £489,000 and £121,200 respectively.

ESG Ratings Regulation: Commission publishes application regime

1 September 2026. The European Commission published a Delegated Regulation setting out the information that firms must provide when applying for authorisation or recognition under the EU ESG Ratings Regulation.

The measure represents another implementation step towards the new regulatory framework for ESG ratings providers. Private fund sponsors that rely on external ESG ratings in investment, due diligence or reporting processes may wish to monitor how the market adapts as the new regime is rolled out.

Cayman Islands: CIMA finalises new AML/CFT/CPF and sanctions rules

20 July 2026. The Cayman Islands Monetary Authority (CIMA) published two new rules introducing binding risk management, governance, sanctions screening and related compliance requirements for regulated financial services providers (FSPs), including regulated investment funds. The rules require a documented compliance-governance framework, suitably qualified AML Compliance Officers and an annual independent audit, with reports filed by 15 September each year.

The rules come into force on 18 September 2026. CIMA-regulated fund vehicles should review their AML/CFT/CPF and sanctions policies, controls, oversight and reporting before that date.

Singapore: Proposals for enhanced tax incentives

19 August 2026. The Monetary Authority of Singapore (MAS) announced a package of measures aimed at strengthening Singapore's position as a global asset management hub, including a proposed tax exemption for certain profit-related returns earned by fund managers providing services to qualifying funds.

Alongside the proposed tax exemption, MAS announced a new Hedge Fund Investment Programme and a dedicated Investment Management Track under Singapore's ONE Pass framework aimed at attracting senior investment professionals.

For more information, see our article here.

US: Regulators push back Form PF deadline

1 September 2026. The US SEC and CFTC have extended the compliance date for the current Form PF from 1 October 2026 to 1 July 2027. The extension was widely anticipated and reflects ongoing work on the revised Form PF reporting framework.

The extension provides additional implementation time for affected managers while signalling that the revised reporting requirements are expected to be finalised before mid-2027.