Investment management update - July 2026

Welcome to the latest edition of our investment management update. This publication has been tailored to highlight topical news, cases and changes in the law impacting the investment management sector.

UK

FCA quarterly consultation paper: on 5 June 2026, the FCA published its quarterly consultation on proposed miscellaneous amendments to the FCA handbook (CP26/17). Amongst others the FCA has proposed to allow certain authorised funds (UCITS and, subject to certain exceptions, NURS) to hold cryptoasset exchange traded notes to a limit of 10% of the value of the scheme property where this is consistent with the disclosed investment objectives and risk profile of a given fund. The FCA does not propose to apply a limit to holdings within qualified investor schemes due to these funds only being sold to professional clients and sophisticated investors.
The FCA has also proposed to replace detailed product-level reports based on Task Force on Climate-related Financial Disclosures (“TCFD”) with fewer, targeted climate disclosure requirements for retail and institutional investors. Entity-level TCFD reports will be preserved. This change should reduce the reporting burden and ensure a coordinated flow of climate information across the investment chain.

CP26/17: Quarterly consultation paper No. 52

Simpler climate reporting rules could save firms £20m annually | FCA

Money market funds (“MMFs”): on 8 June 2026, the FCA published a statement on its proposals for MMF reforms. This follows the Government’s statement on 15 May 2026 that it will lay legislation that will replace the UK Money Market Funds Regulation (“MMFR”) and the FCA’s December 2023 consultation paper CP23/28. The FCA confirms its intention to:

• introduce a new requirement for all MMFs to hold sufficient liquidity for adequate resilience;
• retain the current daily liquid assets and weekly liquid assets requirements as set out in MMFR; and
• proceed with other proposals in CP23/28, including delinking and enhanced know-your-customer requirements relating to investor concentration and the risk of correlated withdrawal. 

The legislation for the repeal of the MMFR is expected to be introduced by the end of 2026 and the FCA confirmed it plans to make new MMF rules to this timescale.

FCA update on reforms to the UK Money Market Fund Regulation | FCA

Anti-money laundering regulations: on 9 June 2026, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 were amended. In particular, the definition of "high-risk third country" has been substituted with countries on the Financial Action Task Force call for action country list. The previous definition captured any country on the FATF ‘increased monitoring’ and ‘call for action’ lists. This change therefore narrows the countries to which enhanced customer due diligence requirements apply. This is expected to allow firms to direct resources to jurisdictions which pose the greatest risk.

The Money Laundering and Terrorist Financing (Amendment) Regulations 2026

Self-invested personal pensions (“SIPPs”): on 22 June 2026, the Financial Conduct Authority (“FCA”) published a consultation paper on the rules for firms operating SIPPs. The FCA is proposing to introduce more explicit requirements relating to due diligence obligations in order to mitigate the risk from scams and fraud. These requirements build upon the due diligence obligations which already exist under the FCA’s high-level rules and the Consumer Duty. The FCA also proposes new rules for the handling of pension scheme money and assets for SIPP operators that use an unauthorised trustee to hold scheme money or assets, which are not currently subject to CASS.

CP26/20: Adapting our rules for a changing market: self-invested personal pensions

Engaging and enabling retail shareholders to vote: on 26 June 2026, the FCA published examples of good practice which increase retail shareholder engagement and reduce barriers to voting. The guidance is relevant to investment platforms, stockbrokers, trading apps and other retail investment intermediaries. It sets out the FCA’s expectations for firms when supporting customer information needs and removing barriers to voting. 

Engaging and enabling retail shareholders to vote: good practice | FCA

FCA Handbook notice 142: on 26 June 2026, the FCA published Handbook Notice 142, setting out changes to the FCA Handbook made by the FCA Board on 25 June 2026. Changes include updates to COLL to reflect amendments in the revised 2025 Statement of Recommended Practice (SORP) for authorised funds. The Board also made changes to the FCA Handbook to implement proposals in the Targeted Clarifications of Handbook Materials Consultation Paper CP25/37. These changes relate to CASS and cover:

• record-keeping requirements for due diligence over third parties holding client assets, including aligning retention periods so that records are retained for a defined period from creation or last modification;
• external custody reconciliation rules in CASS 6, including recognising the use of specified third-party records where appropriate conditions are met, and allowing limited flexibility in reconciliation frequency where firms cannot obtain third-party statements for reasons outside their control;
• the interaction between CASS and the Consumer Duty in relation to the retention of interest on client money and the use of retail clients' safe custody assets; and
  the treatment of bank interest earned on client money under CASS 7, including an option to treat interest received before it is due and payable to clients as unallocated client money until that point, and limited circumstances in which firm-owed interest may be received into a client bank account, subject to prompt removal.

Handbook Notice 142

FCA consultation on Consumer Duty: on 29 June 2026, the FCA published its consultation paper (CP26/23) on reforms to the Consumer Duty. The proposed reforms are targeted at providing more certainty on the scope and application of the Consumer Duty, which the FCA considers is currently applied more widely and intensively than needed, leading to unnecessary cost, complexity and uncertainty.

Key proposals include:

• narrowing the scope of the Consumer Duty by excluding certain specified wholesale business activities as well as business with non-UK customers;
• allowing for more proportionate compliance with the Consumer Duty so that firms with limited influence on consumer outcomes can streamline their adherence to the Consumer Duty; and
• providing greater clarity on the application of the Consumer Duty across distribution chains.

Please see our article for further information on the proposals: Cutting back the Consumer Duty | macfarlanes

CP26/23: Consumer Duty – scope and proportionality

EU

Sustainable Finance Disclosure Regulation (“SFDR”): on 24 June 2026, the Council of the EU agreed its negotiating position ahead of trilogue discussions on the changes to the SFDR, known as SFDR 2.0. The Council's position confirms that companies operating in the fossil fuel sector will be eligible for Transition category funds provided they allocate at least 20% of their capital expenditure to EU taxonomy-aligned activities and maintain a time-bound strategy to reduce Scope 1 and 2 emissions. The mandate also supports counting general purpose public sector issuances towards the Transition category’s 70 per cent positive contribution threshold and requires SFDR-categorised funds to disclose a minimum of three principal adverse impacts. Trilogue negotiations with the European Parliament are expected to commence in Q4 at the earliest.

Council agrees position on simpler transparency rules for sustainable financial products - Consilium

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