SEC Chair Paul Atkins’ radical deregulation agenda, including the elimination of quarterly reporting, signals America’s pivot to “minimum effective dose” regulation while the UK pursues a middle path with comprehensive crypto frameworks alongside reporting simplification. The UK fund management industry faces more structural pressures, with Man Group’s struggles, Petershill’s delisting, and Saba Capital’s activist assault on investment trusts collectively threatening traditional business models. First Brands’ spectacular bankruptcy exposes systemic vulnerabilities in private credit markets, potentially marking the sector’s first major crisis. Meanwhile, sanctions compliance are becoming increasingly complex. UK asset managers must navigate this fragmenting landscape while addressing LGPS consolidation threats, governance challenges around AI investments, and mounting ESG compliance burdens.
ALL FINANCIAL SERVICES
Paul Atkins, the newly appointed SEC Chair, has launched the most dramatic overhaul of US securities regulation since the 1930s, promising to “remove the SEC’s thumb from the scales” and fundamentally reshape market oversight. Atkins is articulating a philosophy that explicitly rejects European regulatory approaches and positions the US as a deregulatory haven for global capital.
KEY ELEMENTS OF THE ATKINS DOCTRINE:
◆ Review of quarterly reporting with potential transition to semi-annual disclosures expected by Q2 2026
◆ Rejection of ESG-motivated disclosures as “social and political objectives” outside SEC mandate
◆ Criticism of European “over-regulation”; creating competitive opportunities for US markets
◆ Commitment to “minimum effective dose” regulation allowing market forces to determine optimal practices
◆ Alignment with broader Trump administration deregulation agenda across financial services
◆ Potential unwinding of climate disclosure rules following precedent of SEC withdrawal from defence
UK asset managers with dual listings must prepare for divergent disclosure requirements, potentially maintaining quarterly reporting for UK/EU markets while enjoying reduced obligations in the US.
“The government should provide the minimum effective dose of regulation needed to protect investors while allowing businesses to flourish. It’s time for the SEC to remove its thumb from the scales and allow the market to dictate the optimal reporting frequency.”
— Paul Atkins, SEC Chair
The FCA has unveiled a comprehensive strategy, balancing enabling innovation with market integrity. They have launched a Scale-Up Unit while maintaining robust financial crime enforcement.
Jessica Rusu, Chief Data, Information and Intelligence Officer, outlined at Merchant Taylors’ Hall on 17 September 2025 how the regulator’s 5-year strategy mentions innovation on every page, positioning growth support as central to its mission. The approach represents a calculated response to US deregulation pressures while maintaining UK market integrity.
Chief Economist Kate Collyer’s “rebalancing risk” framework, delivered at Warwick Business School on 15 September 2025, explicitly accepts that innovation requires managed risk-taking, moving from risk elimination to intelligent risk tolerance.
◆ In her speech at the AFME Conference, Therese Chambers (joint executive director) positioned financial crime controls as an “investment in market confidence” and a growth strategy.
◆ Recent enforcement actions demonstrate the FCA’s increased speed and assertiveness, with case closures now faster, substantial penalties for misleading executives, and key convictions for insider trading and crypto fraud.
◆ The FCA emphasises upstream prevention via digital tools such as Firm Checker and ScamSmart and is developing new models for targeted consumer guidance and advice.
◆ 1,500 permissions were cancelled in 2024—triple the previous figure—reflecting a more robust approach to market integrity.
◆ Regulatory innovation includes supporting AI Labs, Tech Sprints, and new market models (e.g., PISCES) for private securities trading.
The FCA announced on 19 September 2025 that approximately 270,000 motorists will receive £200 million compensation following intervention in total loss claims practices, with £129 million already distributed. Insurers systematically undervalued vehicles through automatic deductions for assumed pre-existing damage, disadvantaging careful drivers and breaching Consumer Duty requirements.
Sarah Pritchard, FCA Deputy Chief Executive, stated: “We’ll step in where we see poor practice, and if firms fall short, we’ll ensure customers are compensated. This should send a clear message that ripping off motorists is unacceptable.”
Process improvements include enhanced valuation methodologies, removal of automatic deductions, and improved settlement transparency.
The intervention demonstrates FCA’s willingness to secure retrospective redress while reshaping industry practices.
Consultation Paper CP25/25, published 17 September 2025, transforms crypto regulation from anti-money laundering focus to full financial services standards. The framework requires FCA authorisation, SM&CR accountability, operational resilience, and comprehensive financial crime controls while acknowledging DLT characteristics through tailored approaches.
Key divergences from traditional finance include treating permissionless DLT as distinct from outsourcing and proportionate capital requirements reflecting crypto business models.
The parallel Consumer Duty discussion (closing 15 October 2025) explores Financial Ombudsman Service access, creating potential liability expansion.
With consultation closing 12 November 2025 and implementation expected 2026 following enabling legislation, firms face 12–18 months to put in place compliance infrastructure that bridges innovation with consumer protection.
On 25 September, the FCA published clarifications on how statutory and contractual cancellation rights apply where tax-free pension lump sums (“pension commencement lump sum” or PCLS) are taken, especially in light of HMRC’s Newsletter 173. The core FCA position: statutory cancellation rights under COBS 15.2 (Joining, Transfers, UCITS) do not apply to standalone PCLS withdrawal—cancellation rights are only triggered if entering a new pension arrangement or transferring a scheme.
Pension providers must design contract terms that distinguish between access (withdrawal) and contract establishment/transfer. Some providers voluntarily extend cancellation rights beyond those required by FCA or HMRC rules, but clarity and documentation are crucial. The FCA expects providers to make it easy for pension customers to understand their cancellation rights and product implications, with guidance cross-referencing both contractual and statutory regimes.
Firms should:
◆ Audit pension product materials for clarity on cancellation rights and withdrawal processes.
◆ Verify that contractual rights are clearly presented and not conflated with statutory requirements.
◆ Stay updated on evolving HMRC guidance to ensure product features align with permitted tax treatment.
The process to appoint a consolidated tape provider for UK bond market transparency has been delayed due to a legal challenge.
◆ The FCA asserts the procurement process was fair and competitive and is continuing market engagement. This impacts wholesale market participants seeking reliable consolidated data feeds for transaction cost analysis and compliance under best execution obligations. Contract signing is postponed until resolution.
The MPC’s 7-2 vote maintaining Bank Rate at 4% reflects deepening policy divisions as CPI inflation remains at 3.8%, nearly double target. Governor Bailey’s exchange of open letters with Chancellor Reeves—the third such exchange in 2025—acknowledges persistent inflation drivers including 5% services inflation and elevated wage growth expected to remain near 3.75% through year-end.
The Committee’s “gradual and careful” easing mantra masks internal tensions: two members dissented for immediate cuts while inflation projections show a 4% peak before gradual 2026 decline. Chancellor Reeves’ promise of inflation-reduction measures in November’s budget adds fiscal-monetary coordination complexity. The £70 billion APF reduction (down from £100 billion) acknowledges gilt market stress with 30-year yields at 27-year highs, balancing monetary objectives against fiscal sustainability.
The PRA’s proposed deletion of 37 reporting templates under CP21/25 represents tangible deregulation, eliminating 15% of regulatory reporting burden. The Future Banking Data programme’s accelerated timeline—consultation closing 22 October with January 2026 implementation—signals urgency in competitive positioning against US simplification.
The proposed deletions include financial assets reporting, performing/non-performing exposures, and credit loss provisions deemed duplicative or unnecessary.
The £26 million annual industry savings, while modest individually, symbolise broader efficiency drives. Combined with MREL threshold increases (£25bn to £40bn for bail-in), these changes particularly benefit challenger banks previously disadvantaged by disproportionate compliance costs.
A former BlackRock chief investment officer is preparing a new credit/special sits hedge fund with a ~$700m initial target.
◆ The launch leans into widening dispersion across corporate and structured credit as refinancing walls meet higher-for-longer rates.
◆ LP interest here signals continued appetite for event-driven and idiosyncratic relative-value credit exposures that don’t rely on beta.
Nordic Capital secured €5bn of commitments toward Fund XII, roughly halfway to its c. $10bn target.
◆ Blue-chip platforms with deep sector benches (healthcare/tech/financial services) continue to out-raise peers despite denominator effects.
◆ Scale matters: larger funds can price and execute complex take-privates and corporate carve-outs where competition is thinner.
Aurora announced a $2.1bn close for its seventh flagship, continuing a control-buyout focus across resilient services and industrial niches.
◆ Oversubscription here underscores LP preference for established managers with realized DPI and clear exit channels.
◆ Larger pool gives flexibility to co-invest and support platform roll-ups despite slower sponsor-to-sponsor markets.
Skyline sealed $125m to back very small-cap companies, a corner where sponsor competition and entry prices remain attractive.
◆ “Micro-market” funds are benefiting from valuation stickiness at the top end by fishing where proprietary sourcing and operational help move the needle.
◆ Expect heavier emphasis on earn-out structures and seller roll-overs to square valuation expectations.
Corsair completed a $600m multi-asset continuation vehicle and associated secondaries fund to extend ownership in select assets and provide liquidity to existing LPs.
◆ Reflects the tight M&A exit window and the growing role of GP-led secondaries to bridge valuation gaps.
◆ Offers LPs optionality—roll vs. cash-out—while resetting growth capital and incentive alignment for the next hold period.
ALL REGULATED FIRMS
The FCA secured a data protection conviction even as fraud charges failed to stick. Nicholas Harper, 26, of Taunton, pleaded guilty to assisting or encouraging a Data Protection Act breach, receiving a £100 fine despite his acquittal on conspiracy to defraud and unauthorised regulated activity charges at Southwark Crown Court.
The modest penalty shows the FCA will pursue data breaches as standalone offences within broader misconduct patterns.
Firms should anticipate hybrid investigations where data protection violations provide alternative prosecution routes when financial crime charges face evidential challenges.
FINANCIAL SERVICES
The reputation of the U.S. Attorney’s Office for the Southern District of New York (SDNY), often called the “Sovereign District of New York” for its fierce independence, is under threat.
A recent FT report alleges that the Trump administration is directly intervening in SDNY’s operations. This is exemplified by the indictment of former FBI Director and SDNY head James Comey, the firing of a key prosecutor in the Jeffrey Epstein case, and the forced resignation of senior staff who resisted orders to drop a bribery case against New York City Mayor Eric Adams.
Data shows a significant drop in new criminal cases filed by the SDNY, hitting its lowest level in over a decade. The DoJ has signalled a shift away from aggressive white-collar enforcement, expressing concern that it “burdens US businesses.”
This new posture has also made it harder for prosecutors to secure co-operation from witnesses and victims who fear that a successful prosecution could be overturned by a political pardon.
Internally, prosecutors are reportedly demoralised, fearing their cases could be killed for political reasons. The current climate suggests that political considerations may now overshadow the pursuit of justice, particularly in areas like white-collar crime where the SDNY has historically played a critical international role. The new leadership, led by former Apollo Global Management chair Jay Clayton, faces the difficult task of preserving the office’s integrity amidst immense pressure from Washington.
This degradation of America’s leading financial crimes unit may impact global enforcement and embolden financial criminals.
HEDGE FUNDS
The world’s largest listed hedge fund manager, Man Group, experienced a volatile first half of 2025. While overall assets under management rose to a record $193.3 billion due to strong net inflows, performance was mixed across strategies. Trend-following hedge fund products such as AHL Alpha and AHL Evolution posted negative returns of -7.8% and -10.4% respectively for H1 2025, reflecting some of the toughest conditions for trend managers in decades. Man Group’s asset-weighted investment performance trailed major peers during the period, largely due to underperformance in certain flagship alternatives.
The firm continues to face challenges as traditional hedge fund models are tested by adverse market trends and increased competition from passive and private market strategies. Despite this, strong results from systematic long-only and credit strategies helped offset declines in absolute return products but the firm has seen declining profitability.
Saba Capital’s launch of a UCITS ETF targeting UK investment trusts represents a major threat to the traditional governance model of the £267 billion sector. With trusts trading at an average 14.2% discount to NAV (representing £38 billion in trapped value), Weinstein’s strategy bypasses board resistance by accumulating voting power across multiple trusts to force value-realising actions.
Investment trust boards face unprecedented pressure to proactively narrow discounts through buybacks, tender offers, or structural changes. The Middlefield Canadian Income trust’s conversion to an ETF signals the beginning of sector transformation. Trust boards that maintain wide discounts could become immediate targets, potentially triggering a cascade of defensive actions. Boards must choose between voluntary reform (protecting some independence) or forced change through activist pressure. Asset managers should expect fee compression, increased governance costs, and potential fund consolidation.
Goldman Sachs’ withdrawal of Petershill Partners from public markets exposes London’s inability to properly value complex financial assets. The $4.5 billion take-private at a 35% premium paradoxically occurred while the vehicle traded at a 40% discount to NAV, highlighting the market’s cognitive dissonance regarding alternative asset managers. This delisting removes crucial retail access to private markets precisely when institutional allocations to alternatives reach record highs.
The transaction’s timing—amid broader UK market outflows exceeding £15 billion annually—signals international banks’ diminishing confidence in London as a listing venue.
For UK asset managers, Petershill’s fate demonstrates that even blue-chip backing cannot overcome structural market deficiencies. The implications extend beyond individual transactions: without liquid public markets for alternative assets, UK investors face permanent exclusion from the sector’s growth, while managers must seek US listings or remain private, further marginalising London’s capital markets.
Active fund managers in the UK, including firms like Baillie Gifford, are set to lose billions in mandates as the government forces a major consolidation of the £392 billion Local Government Pension Scheme (LGPS). This move will close two of the eight existing pension pools, Access and Brunel, and transfer nearly £90 billion in assets to the remaining six. The government’s goal, championed by Chancellor Rachel Reeves, is to lower costs and encourage pools to manage more assets in-house, a model inspired by Canada’s large pension funds.
While firms like Baillie Gifford, which has the largest exposure with nearly £10 billion in mandates from the two pools, hope to retain their relationships, the consolidation will reduce the number of external mandates and intensify competition. This adds to the existing pressure on UK active funds, which are already struggling with years of client outflows to lower-cost passive alternatives.
UK managers must either achieve scale through rapid consolidation, pivot to wealth management distribution, or accept marginalisation.
Stuart Kirk’s warning about unchecked AI spending highlights governance failures reminiscent of pre-crisis risk management breakdowns. Boards approving hundreds of billions in AI infrastructure lack fundamental understanding of the technology, relying on management assertions about transformative potential without meaningful oversight mechanisms.
The absence of standardised AI ROI metrics enables executives to avoid accountability while pursuing empire-building strategies. Current governance structures—designed for industrial-era capital allocation—cannot evaluate investments where competitive advantage derives from algorithmic superiority rather than physical assets.
Compensation committees increasingly link executive rewards to AI implementation metrics without defining success criteria or considering value destruction risks. The accounting treatment of AI investments as capital rather than operating expenses obscures true costs while inflating reported assets.
Shareholder rights remain undefined regarding transformative technology bets that could obsolete existing business models. Managers holding significant technology positions face fiduciary challenges: supporting necessary innovation while preventing speculative excess. Without effective governance reform, AI investments risk becoming this generation’s dot-com bubble.
The US ESG deregulation and European compliance acceleration places UK asset managers in a difficult position. While Paul Atkins dismisses ESG disclosures as “social and political objectives,” the EU’s CSRD and SFDR create prescriptive reporting requiring thousands of data points.
UK managers must maintain dual compliance frameworks: simplified US frameworks for US clients while meeting comprehensive European requirements.
The FCA’s evolving SDR regime adds a third layer, creating unique UK obligations. Compliance costs can exceed 15% of operating expenses for mid-sized managers, with ESG-specific headcount tripling since 2022.
Data verification challenges multiply as supply chain reporting extends to Scope 3 emissions and social metrics lacking standardised methodologies. Greenwashing risks increase as regulators apply subjective standards to sustainability claims.
Reform UK allies have called for the elimination of “virtually all” regulators, echoing US deregulation trends and creating political pressure on the government’s regulatory approach. This follows Germany’s appointment of a new deregulation chief who promises to be “more subtle than Elon Musk” in dismantling bureaucracy.
The convergence of political movements across Western democracies toward deregulation raises questions about the future of regulatory oversight.
◆ 7 October: Critical deadline for PRA/FCA consultation on SM&CR fundamental reforms
◆ 15 October: FCA discussion paper deadline on Consumer Duty application to crypto firms
◆ 20 October: HM Treasury consultation closes on PSR integration into FCA
◆ 12 November: FCA CP25/25 consultation closes on comprehensive cryptoasset framework
With US deregulation creating competitive advantages and private credit markets showing systemic vulnerabilities, how should UK asset managers respond?
We welcome your perspectives on this challenge.
The global regulatory equilibrium is in limbo. With SEC Chair Paul Atkins spearheading an aggressive dismantling of post-2008 guardrails—starting with the abolition of quarterly reporting and ESG mandates—the U.S. is making an unapologetic bid to become the global capital market of least resistance.
Meanwhile, the UK faces a big challenge of reconciling innovation with market integrity, while EU compliance regimes double down on prescriptiveness.
In this context, “compliance” is now more than a static checklist of obligations. Boards must now grapple with a sobering fact: strategic value and regulatory posture are converging. A firm’s capital cost, market access, and competitive edge increasingly hinge on how fluently it can speak multiple regulatory dialects—and pivot between them.