The Managed Funds Association (MFA) has called on the UK government and regulators to overhaul the Alternative Investment Fund Managers Directive (AIFMD) regime, proposing reforms that would reduce operational burdens for hedge funds while bolstering the UK’s global competitiveness.

In a formal response to consultations by HM Treasury and the Financial Conduct Authority (FCA), the MFA laid out a series of recommendations aimed at enhancing flexibility for alternative investment fund managers (AIFMs) and streamlining compliance costs for institutional investors and asset managers.

“A modernised regulatory framework for AIFMs is necessary to keep the UK competitive in a rapidly evolving global market,” said Jillien Flores, MFA’s Chief Advocacy Officer. “Our proposals aim to maintain high regulatory standards while offering hedge funds the flexibility to innovate and scale.”

Among the key proposals the MFA is advocating a shift from prescriptive rules to a more principles-driven approach, allowing firms to meet core objectives like risk management and investor protection with greater autonomy, and the avoidance of arbitrary size-based thresholds that impose new regulatory burdens, which the MFA says currently discourage fund growth and investor access.