Private Funds View - September 2026

Welcome to the September 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. SM&CR: Non-financial misconduct rules now live
2. FCA publishes first market-wide analysis of UK alternative investment funds
3. JMLSG finalises revisions to AML and CTF guidance
4. HMT reiterates support for private capital and asset management growth agenda
5. FCA finalises changes to TCFD-aligned reporting for institutional clients
6. New right to work checks from 1 October 2026 – action for sponsors
7. FCA drops mandatory climate reporting in favour of comply-or-explain under new UK SRS

EU

1. SFDR 2.0: ECON adopts its negotiating position, including a professional-investor opt-out
2. ESMA's Trends, Risks and Vulnerabilities Report flags private credit as a key vulnerability
3. EBA finalises Guidelines on non-ICT third-party risk management
4. EBA seeks technical advice on private credit exposures of banks and NBFIs
5. EmpCo Directive now live – implications for fund marketing and ESG claims
6. ESMA publishes its Annual Work Programme for 2027

Best of the rest – UK Government consults on modernising corporate reporting | Upper Tribunal upholds FCA decision to fine and ban Odey for lack of integrity | FCA and BoE feedback statement on adopting tokenisation in wholesale financial markets, and a call for input on opportunities and risks for tokenised gold | FCA speech on the future of tokenisation and digital market infrastructure in UK wholesale financial markets | FCA findings from its multi-firm review of money mule activity | Netherlands - AFM flags AML and sanctions compliance gaps among light-regime fund managers | France - AMF reviews call recording compliance at asset managers

Main Topics

UK

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.

For further analysis of the FCA's non-financial misconduct framework and the practical steps firms should be taking, see our publication here.

FCA publishes first market-wide analysis of UK alternative investment funds

3 September 2026. The FCA published a research note on the UK alternative investment fund (AIF) market; its first publication to use AIFMD regulatory reporting data to build a market-wide picture of the sector.

The research finds that UK AIF assets reached around £1.8 trillion in 2025, with private credit identified as one of the fastest-growing segments. Professional investors continue to dominate the sector, and leverage and liquidity risks are concentrated in particular fund types rather than spread evenly across the market. The FCA notes that the analysis informed its proposals to modernise the UK AIFM regime and provides a baseline against which future regulatory change can be assessed. The research therefore represents useful context for the FCA’s proposed move in CP26/28 to a three-tier, NAV-based categorisation framework and the calibration of the proposed thresholds.

For further analysis of the FCA's proposed UK AIFM reforms, including the new three-tier categorisation framework and associated regulatory obligations, see our publication here.

JMLSG finalises revisions to AML and CTF guidance

3 September 2026. The Joint Money Laundering Steering Group (JMLSG) announced that it has finalised revisions to Part I of its anti-money laundering (AML) and counter-terrorist financing (CTF) guidance, covering firms' policies, controls and procedures, and guidance on CDD for pooled client accounts and verification of identity for persons acting on behalf of a customer.

The revised guidance has been submitted to HM Treasury for ministerial approval. Private fund managers, particularly those onboarding pooled or nominee structures, should review their CDD procedures against the finalised guidance once approved.

HMT reiterates support for private capital and asset management growth agenda

10 September 2026. The Economic Secretary to the Treasury, Lucy Rigby, delivered a speech at the UK Private Capital Summit reaffirming the Government's commitment to making the UK a leading global asset management and private capital hub, pointing to proposed reforms to the AIFM regime and a package of reforms for venture capital fund managers aimed at a more proportionate regulatory framework.

The Economic Secretary also acknowledged growing regulatory and financial stability scrutiny of private markets, particularly private credit, referencing the G7's focus on risks arising from the private credit ecosystem and welcoming industry participation in the Bank of England's System-Wide Exploratory Scenario (SWES) exercise. The speech is a useful signal that the growth agenda for private capital continues to sit alongside closer supervisory attention on private credit risk.

FCA finalises changes to TCFD-aligned reporting for institutional clients

25 September 2026. The FCA published final rules on TCFD-aligned reporting, replacing product-level reporting with separate rules for communications to retail and institutional clients. For institutional clients, firms must provide Scope 1, 2 and 3 greenhouse gas emissions data on request, limited to one request per product per calendar year, and should also provide further climate data and an explanation of data quality where practicable. Firms should not provide data that is, in their reasonable opinion, misleading given data gaps or methodological limitations.

The new rules on institutional communications take effect from 30 June 2027, aligning with firms' existing annual TCFD reporting cycle. Private fund managers should review how they currently service investor climate-data requests and begin scoping what data can practicably be provided within the transitional window. The FCA has separately indicated it will consider how to streamline entity-level TCFD reporting, with an update expected in due course.

For more detail on the FCA's proposed reforms to climate-related disclosures and communications to investors, see our publication here.

New right to work checks from 1 October 2026 – action for sponsors

1 October 2026. New UK right to work rules take effect, extending the illegal working civil penalty regime up the supply chain. Employers will need to put in place (or vary) contractual measures with third parties who supply personnel, including staffing agencies, managed service providers, outsourced teams and online matching services.

The changes are not limited to fund managers and will also affect portfolio companies, particularly those operating in sectors the Home Office has identified as higher risk for illegal working, including hospitality, retail, construction, warehousing and delivery services. Sponsors should assess current staffing arrangements and consider whether existing third-party contracts need updating.

FCA drops mandatory climate reporting in favour of comply-or-explain under new UK SRS

30 September 2026. The FCA published PS26/19, updating UK listing rules to include UK SRS1 and S2, aligning sustainability disclosures with international standards. The FCA opted for a comply-or-explain approach across the full SRS standard rather than the mandatory climate reporting originally proposed. The new rules apply to accounting periods starting from 1 January 2027, with initial reporting beginning from 2028. The FCA has also launched a related consultation (GC26/6) on a technical note to support proportionate application of comply-or-explain.

The changes soften the compliance burden on UK-listed portfolio companies that would otherwise have faced mandatory climate disclosures from 2027. Sponsors relying on consistent, comparable ESG data across portfolio companies for their own investor reporting should note that some issuers may now choose not to report, or to report less comprehensively, under the explain limb.

EU

SFDR 2.0: ECON adopts its negotiating position, including a professional-investor opt-out

10 September 2026. The European Parliament's Economic and Monetary Affairs Committee (ECON) voted to adopt its draft report and negotiating mandate on SFDR 2.0. Most significantly for private fund sponsors, the compromise text includes a proposed exemption (Article 17) for AIFs marketed exclusively to professional investors from the new product categorisation regime, provided the AIFM discloses that the fund is uncategorised and explains why.

The text also retains the three product categories (Sustainable, Transition and ESG basics) and an exemption for closed-ended funds fully closed before SFDR 2.0 applies. ECON's mandate is expected to be confirmed at the October 2026 plenary, after which trilogue negotiations with the Council and Commission can begin, with the aim of settling the Level 1 text by year end. Sponsors of professional-only vehicles should track the professional-investor opt-out closely, as its survival through trilogue would materially reduce the categorisation burden for private funds.

For a broader overview of proposed reforms to the SFDR framework, see our briefing note here.

ESMA's Trends, Risks and Vulnerabilities Report flags private credit as a key vulnerability

10 September 2026. ESMA published its second Trends, Risks and Vulnerabilities (TRV) Report of 2026, warning that elevated equity valuations sit alongside a deteriorating macro-financial outlook and specifically highlighting risks associated with private credit exposures to the US market and growing links between crypto-asset markets and the wider financial system.

For asset managers, ESMA reports that fund performance and flows remained positive despite volatility, but that valuation risk continues to be a concern across most fund categories, alongside emerging interest rate and credit risk concerns. The report also notes increasing interest in tokenisation and AI-related investment strategies. Sponsors should expect valuation practices, leverage metrics and liquidity terms to remain a supervisory focus over the coming months.

EBA finalises Guidelines on non-ICT third-party risk management

21 September 2026. The European Banking Authority (EBA) published its final Guidelines on the management of risks arising from non-ICT third-party arrangements, updating its 2019 outsourcing guidelines and aligning the framework more closely with the EU Digital Operational Resilience Act (DORA). The Guidelines cover the full lifecycle of a third-party arrangement supporting a critical or important function, including risk assessment, due diligence, contractual terms, subcontracting, ongoing monitoring, exit strategies and termination.

The Guidelines apply to certain MiFID investment firms but do not apply directly to AIFMs or UCITS management companies, but parent undertakings and subsidiaries subject to the Capital Requirements Directive must ensure consistent standards are applied across the group, including in entities such as AIFMs and UCITS managers that are not directly in scope. The final text reflects a more proportionate, risk-based approach than the original draft, with lighter requirements for non-critical arrangements and a clearer distinction between critical and non-critical services. The Guidelines apply two years after official translations are published; sponsors within CRD groups should begin mapping non-ICT third-party arrangements against the new lifecycle requirements.

For a detailed breakdown of the new requirements and their practical implications, see our publication here.

EBA seeks technical advice on private credit exposures of banks and NBFIs

24 September 2026. The European Commission issued a call for technical advice asking the EBA, EIOPA and ESMA to conduct a targeted assessment of private credit activities and exposures across EU banks and non-bank financial intermediaries (NBFIs), including investment funds.

The request covers lending and investment exposure to private credit (broadly defined to include direct lending and fund vehicles performing lending activity), gaps in the existing reporting framework, retail investor participation, and interconnections between banks and NBFIs through private credit. The ESAs must report back within six months. This is a direct precursor to closer EU supervisory scrutiny of private credit funds and their bank counterparties, and sponsors active in direct lending should expect increased data requests as this work progresses.

EmpCo Directive starts applying – implications for fund marketing and ESG claims

27 September 2026. The EU Empowering Consumers for the Green Transition Directive (EmpCo) went live across the EU on 27 September. EmpCo adds a defined set of environmental and sustainability claim practices to the blacklist of practices considered unfair in all circumstances, with all other green claims remaining subject to a case-by-case assessment of whether they mislead the average consumer. The European Commission has published a Q&A on the Directive's application.

While EmpCo is a consumer protection measure rather than a financial services regulation, it is relevant to private fund sponsors and their portfolio companies to the extent they market products or services using environmental or sustainability claims to EU consumers, including consumer-facing fund and portfolio company marketing. Sponsors should review consumer-facing green claims and any retail distribution materials against the new rules ahead of enforcement.

ESMA publishes its Annual Work Programme for 2027

28 September 2026. ESMA published its Annual Work Programme for 2027, setting out its planned supervisory and policy priorities for the year, guided by its Multi-Annual Work Programme. ESMA highlights the work programme as an important milestone for the Savings and Investments Union, built around three themes: growing supervisory mandates (including direct supervision responsibilities that will continue to expand), delivering more efficient financial markets, and harnessing data and technological innovation.

For private fund sponsors, the work programme is a useful early signal of where ESMA's supervisory and policy attention – including on asset management, private credit and fund reporting – is likely to fall in 2027.

Best of the rest

UK Government consults on modernising corporate reporting

7 September 2026. The Department for Business, Innovation, Science and Trade (BIST) published a consultation on simplifying corporate reporting requirements, including revisiting company size thresholds, reducing reporting burdens for medium-sized companies and reviewing non-financial reporting requirements. The consultation also confirms that UK SRS disclosures made under the FCA's Listing Rules will satisfy Companies Act climate disclosure requirements, helping to avoid duplicative reporting.

The proposals could reduce reporting obligations for some portfolio companies and provide greater certainty on climate reporting requirements. Of particular interest is the proposal to extend directors' safe harbour protections to sustainability disclosures made outside the strategic report, which may help alleviate liability concerns and encourage more fulsome sustainability reporting. The consultation closes on 30 November 2026.

Upper Tribunal upholds FCA decision to fine and ban Odey for lack of integrity

14 September 2026. The Upper Tribunal (Tax and Chancery Chamber) upheld the FCA's decision notice against Robert Crispin Odey, founder and majority owner of Odey Asset Management LLP, fully agreeing that each of the five allegations against him demonstrated a lack of integrity and a breach of Individual Conduct Rule 1.

FCA and BoE publish a feedback statement on adopting tokenisation in wholesale financial markets, and a call for input on opportunities and risks for tokenised gold

14 September 2026. The FCA and Bank of England published feedback statement FS26/1 on tokenisation in UK wholesale financial markets, following their joint May 2026 call for input, and will develop a joint Tokenisation Roadmap later in 2026 covering collateral mobility, custody and settlement infrastructure. Alongside this, the FCA published a linked call for input on tokenised gold, exploring its potential as wholesale collateral and a retail investment product, and whether uncertainty over the collective investment scheme and AIF regulatory perimeter is hindering adoption; comments are due by 23 October 2026.

Private fund sponsors exploring tokenised collateral, custody or gold-backed strategies should consider engaging with both consultations while the regulatory framework is still taking shape.

FCA publishes a speech on the future of tokenisation and digital market infrastructure in UK wholesale financial markets

22 and 24 September 2026. The FCA published a speech calling for the UK to move from experimentation to wider adoption of tokenisation, pointing to the fund tokenisation framework (PS26/7), the UK's first native tokenised fund, the finalised stablecoin regime (PS26/10), and work on digital gilts and stablecoin settlement. The FCA and Bank of England will publish a joint adoption roadmap, and the FCA will consult on safeguarding requirements for tokenised investment assets.

This complements the FS26/1 feedback statement and tokenised gold call for input above – sponsors engaging with the UK's tokenisation framework should factor the roadmap and safeguarding consultation into their planning.

FCA publishes findings from its multi-firm review of money mule activity

23 September 2026. The FCA published the findings of its multi-firm review into money mule activity and the cashing out of fraud proceeds, looking at how criminals move funds between accounts and when money is extracted from the financial system. The FCA sets out its expectations for firms, including understanding how criminals move funds between accounts, regularly reviewing controls, and considering indicators beyond the initial receiving account.

Private fund sponsors and their fund administrators should review client and investor account monitoring controls against these expectations, particularly where fund subscription or redemption accounts could be exploited to move illicit funds.

Netherlands - AFM flags AML and sanctions compliance gaps among light-regime fund managers

15 September 2026. The AFM published findings from its 2025 review of compliance with the Dutch AML and sanctions regimes. While compliance improved overall, light-regime alternative investment fund managers continued to lag behind authorised managers. The AFM highlighted gaps in risk assessments, customer due diligence, transaction monitoring, FIU registration and training.

Dutch light-regime sponsors should treat the findings as a prompt to remediate weaknesses across their AML and sanctions frameworks, particularly risk assessments, customer due diligence, transaction monitoring, FIU registration and training. The AFM’s comparison with authorised managers indicates that proportionate registration regimes do not reduce its expectations for effective financial-crime controls.

France - AMF reviews call recording compliance at asset managers

15 September 2026. The AMF published the results of a thematic review of telephone recording practices at five asset management companies. It emphasised that recording obligations remain applicable despite declining use of telephone trading and identified areas for improvement in policies, controls and employee awareness.

French-authorised sponsors should reassess whether their recording policies, monitoring controls and staff training remain effective, particularly where trading has shifted from telephone calls to other communication channels. The findings may also be a useful benchmark for sponsors conducting compliance reviews across EU management platforms.