New rules to make long-term investment funds clearer

Key dates

2026-10-08

FCA published the consultation announcement and CP26/35, Fair redemption terms for authorised funds investing in illiquid assets.

2026-12-11 Deadline

Deadline for feedback on the FCA consultation proposals.

Suggested considerations

• Firms should identify NURS portfolios containing inherently illiquid assets and assess whether current dealing frequency, redemption terms, liquidity buffers and asset-realisation assumptions are consistent with a proposed 90-day minimum notice period.
• Compliance teams may wish to compare each affected fund's prospectus, instrument constituting the fund, product governance documents, financial promotions and investor disclosures against the proposed requirement for clear access and suitability information.
• Asset managers should model the effect of 90-day and longer notice periods on liquidity stress scenarios, orderly asset sales, valuation processes, dilution and the treatment of redeeming and remaining investors.
• Firms should consider whether any fund requires a notice period longer than 90 days because its assets or strategy cannot support orderly realisation within that minimum period.
• Managers of existing affected funds should develop a transition plan covering the two-year compliance period, including the required minimum one-year investor notice and any required investor-consent, documentation or distribution steps.
• Firms should consider responding to CP26/35 by 2026-12-11, particularly on the proposed scope, definition and operational consequences of the redemption requirements.
• Distributors and advisers should review whether product descriptions, target-market assessments and suitability or appropriateness communications accurately explain the proposed limited access to capital and the distinction between long-term illiquid funds and products offering quick access.

What changed

The FCA proposes that relevant NURS investors must provide at least 90 days' notice before redeeming units. Managers could set a longer notice period where the fund's assets or investment strategy require additional time to raise liquidity. Fund documentation and communications should state clearly how quickly investors can redeem and whether the fund is suitable for investors seeking rapid access to capital. Existing funds would have two years to comply, with investors receiving at least one year's notice of the change. The proposal follows the FCA's existing long-term asset fund framework, under which a minimum 90-day notice period and no more than monthly redemption determinations apply; independent market commentary identifies the underlying issue as a liquidity mismatch between daily

Who is affected

• Authorised fund managers of UK non-UCITS retail schemes investing in inherently illiquid assets
• UK NURS investing in property, infrastructure or other assets that cannot normally be sold quickly without significant loss of value
• Distributors and firms providing advice or investment services for affected NURS
• Investors in affected existing and new NURS

Related regulations

• FCA Handbook COLL 15 long-term asset fund rules
• FCA Handbook rules for non-UCITS retail schemes
• FCA liquidity risk management requirements for authorised funds
• IOSCO Recommendations for Liquidity Risk Management for Collective Investment Schemes