FCA’s anticipated priorities for authorised funds

The FCA's 2025–2030 strategy is anchored in four broad objectives: becoming a smarter, more efficient regulator; supporting competitiveness and innovation; helping consumers achieve good financial outcomes; and tackling financial crime. 

Below, we explore the FCA's key priorities for 2026 and how each may impact UK authorised funds and their managers.

Consumer Duty: Embedding good investor outcomes

The FCA's Consumer Duty remains a core supervisory priority going into 2026.

The regulator has made clear that its focus is shifting from initial implementation to assessing whether firms are delivering tangible outcomes for investors. For authorised fund managers, this means it will no longer be sufficient to demonstrate intent or rely on policies and frameworks alone; firms will be expected to evidence that the Duty is fully embedded in practice. 

The FCA has announced plans for multi-firm reviews examining how firms oversee customer outcomes across product design, distribution agreements, and investor communications. 

Managers of UK authorised funds are therefore likely to need robust data and management information to demonstrate that their funds deliver fair price and value, and support good investor outcomes on an ongoing basis. 

For authorised funds, this reinforces existing obligations around treating customers fairly and conducting annual value assessments, while raising the bar on the quality of oversight and challenge expected. The FCA is likely to test whether product governance arrangements are operating effectively in practice, including whether fund objectives, charges, and performance outcomes align with investors' best interests.

Protecting vulnerable investors in funds is another area of continued focus, with firms expected to identify vulnerability, monitor related complaints and outcomes, and ensure that vulnerable customers investing in funds are adequately supported and protected.

ESG and sustainable finance initiatives

Environmental, Social, and Governance (ESG) regulation is moving firmly from policy design into implementation and supervision in 2026. The FCA is embedding its Sustainability Disclosure Requirements (SDR), including the use of sustainable investment labels and enhanced product-level disclosures designed to prevent greenwashing.

For UK authorised funds that promote sustainability characteristics, these rules set criteria for the use of labels and impose restrictions on fund naming and marketing, alongside detailed disclosure obligations explaining how sustainability objectives are pursued in practice.

The FCA is also consulting on a framework to authorise and oversee ESG ratings providers, with the aim of improving transparency, governance, and reliability in the ESG ratings market. This is particularly relevant for authorised fund managers, many of whom rely on third-party ESG data and ratings in portfolio construction, risk management, and investor reporting.

In parallel, the FCA has indicated that it will continue aligning UK sustainability disclosure expectations with global standards such as those developed by the International Sustainability Standards Board (ISSB), including enhanced expectations around climate-related transition planning. As a result, authorised funds may increasingly be expected to reflect ISSB-aligned climate and sustainability metrics in their reporting, supporting more consistent and comparable information for investors.

Overall, sustainable finance remains a core FCA priority, with funds expected to demonstrate credible ESG practices supported by clear, accurate and substantiated disclosures.

Regulatory reforms for fund managers and products

One of the most significant areas of reform expected to shape the funds landscape in 2026 is the overhaul of the UK's Alternative Investment Fund Managers Directive regime.

Following Brexit, HM Treasury and the FCA are seeking to tailor the framework to the UK market, with a stated aim of making the regime more proportionate and risk sensitive. This includes proposals to move away from rigid thresholds and to better differentiate regulatory requirements based on the size, structure, and activities of alternative fund managers.

Further consultations and more detailed policy proposals are expected to progress during 2026, with the potential to ease regulatory burdens for smaller or lower-risk managers while focusing supervisory resources on higher-risk activities.

Alongside this, reforms to retail investor disclosures represent a major change for authorised funds. The UK is replacing the EU-derived PRIIPs and UCITS KIID requirements with a new, more flexible product summary disclosure regime designed to improve consumer understanding.

Under the new approach, prescriptive templates are expected to be withdrawn, with firms instead required to produce a concise and engaging summary document covering key information such as costs, risks, and performance. Fund managers of UK UCITS and other authorised funds will need to prepare for these new disclosures, with transitional arrangements expected to allow firms time to adapt their documentation and systems.

Digital innovation: Tokenisation and FinTech

The FCA has signalled strong support for technological innovation in asset management, provided it is implemented in a way that maintains market integrity and investor protection. In late 2025, the FCA published proposals exploring how fund tokenisation – the use of distributed ledger technology (DLT) to represent fund units digitally – could be accommodated within the UK regulatory framework.

Tokenisation has the potential to enable more efficient settlement, support new distribution models, broaden investor access to certain asset classes, and reduce operational costs. The FCA's proposals include guidance on operating DLT-based unit registers within existing rules, as well as exploring more streamlined dealing and settlement models for authorised funds. 

During 2026, the UK market may begin to see early examples of FCA-authorised tokenised fund structures. Fund managers should consider engaging with these developments, as the FCA has indicated that it is open to innovation where robust governance, disclosure, and investor protections are maintained.

Alongside blockchain-based innovation, the FCA has also encouraged the responsible adoption of artificial intelligence and advanced data analytics. The regulator’s approach is to apply existing principles – including the Consumer Duty, systems and control, and governance requirements - to the use of AI, rather than introducing extensive AI-specific regulations. 

For authorised fund managers, this may support the use of AI in areas such as portfolio management, risk monitoring, and investor servicing, provided firms can demonstrate fair outcomes, appropriate oversight, and effective management of bias and model risk.

Operational resilience and governance

In 2026, authorised fund managers and fund management firms should expect the FCA to seek evidence of robust operational resilience, including the ability of fund operations to withstand cyber-attacks, technology outages, or the failure of a key third-party service provider.

Firms are now required to identify their important business services, set impact tolerances, and test their ability to remain within those tolerances during severe but plausible disruptions. The FCA has indicated that it will increasingly use data-led supervision to identify weaknesses and may undertake targeted reviews within the asset management sector.

Strong governance remains a fundamental supervisory priority. In 2026, the FCA's focus is likely to continue to include conflicts of interest, valuation practices, and the effectiveness of risk oversight within authorised fund managers. Fund boards should ensure they have sufficient independence, expertise and information to provide effective challenge to executive management.

This expectation extends to oversight of third-party delegates, including fund administrators, custodians, and investment advisers, where firms remain accountable for outsourced activities. Senior managers should ensure there is clear ownership of operational resilience and compliance responsibilities under the Senior Managers and Certification Regime, as the FCA will continue to hold individuals accountable where governance or controls fall short.

Fighting financial crime and market integrity

Protecting market integrity and tackling financial crime remain core FCA priorities through 2026. The FCA has indicated that it is continuing to invest in data-led supervisory tools to detect and prevent financial crime more effectively, including enhanced intelligence sharing with law enforcement and other agencies.

Authorised fund managers should therefore expect more proactive assessment of their financial crime systems and controls, particularly where firms operate in higher-risk markets or manage complex investor structures.

The FCA's continued focus on market integrity suggests that it will remain active in addressing market abuse and misconduct within the funds sector. Risks such as insider dealing, improper handling of confidential information, and misleading financial promotions for funds are likely to remain on the regulator's radar.

The FCA has also signalled that it is refining its enforcement approach, with a focus on pursuing fewer but more impactful cases. In this context, fund management firms should maintain a strong culture of integrity at all levels of the organisation, which the FCA has consistently described as foundational to preventing harm and maintaining market confidence.

Conclusion: Preparing for 2026

The FCA's stated priorities for 2026 reflect an evolution in the UK regulatory approach, combining a continued emphasis on high standards and accountability with support for innovation and growth. 

For UK authorised funds and their managers, this points to a dynamic regulatory environment: delivering good investor outcomes under the Consumer Duty, embedding transparent and credible ESG practices, adapting to ongoing regulatory reform, and leveraging technology, all under the supervision of an increasingly data-led regulator.

Against this backdrop, authorised fund managers should consider using horizon-scanning exercises to refresh their compliance and governance roadmaps. Key actions may include reviewing Consumer Duty implementation with a focus on evidencing outcomes, assessing fund documentation and marketing against upcoming ESG and disclosure requirements, engaging with 

FCA consultations on fund regime reform, investing in technology to improve efficiency and oversight, and re-testing operational resilience and financial crime controls. Firms within FS assets, funds and investment sectors that take a proactive and structured approach are likely not only to mitigate regulatory risk, but also to position themselves competitively in 2026 and beyond.