FCA FRAME fund reporting explained: what CP26/26 changes for asset managers

The Financial Conduct Authority (FCA) has proposed a new reporting framework for the UK's £16.5 trillion asset-management sector. Fund Reporting for Asset Management Entities (FRAME) would replace several existing returns with a common system, give funds below £500 million lighter requirements and collect holdings data from certain authorised funds for the first time.

The proposal in consultation paper CP26/26 is described as a 75% reduction in the reporting burden across fund managers. That headline does not mean every firm would file less information. Alternative investment fund managers (AIFMs) are expected to make most of the savings, while managers of Undertakings for Collective Investment in Transferable Securities (UCITS) would take on regular fund-level reporting costs that do not have a comparable baseline today.

FRAME changes the allocation of reporting work. Smaller funds would supply an essential dataset. Funds with a net asset value (NAV) of £500 million or more would add enhanced information about investors, fees, performance, concentrations, liquidity and exposures. The FCA would gain a more consistent view of a market that is currently reported through different forms and definitions.

How FRAME would divide fund reporting

Reporting frequency and submission time would still depend on the fund. UK UCITS would report quarterly under the proposal, while many Alternative Investment Funds (AIFs) would report annually unless they were hedge funds. Submission lags range from 30 days for UK UCITS to 120 days for many unauthorised AIFs, with different periods for hedge funds and some authorised fund types.

The common framework therefore does not turn every fund into the same reporting case. It standardises the base while preserving different schedules and specialist questions where the underlying activity creates a different risk.

The £500m threshold concentrates the detailed questions

The threshold is designed to reduce reporting for the large number of smaller funds without removing the FCA's view of most assets. Its analysis says enhanced reporting at £500 million would cover 88% of total AIF NAV while applying to 19% of AIFs. For UK-domiciled UCITS, it would cover 85% of NAV and 29% of funds.

Essential reporting would still identify the fund, its manager, strategy, assets, liabilities, leverage and other core characteristics. Conditional questions would apply where a fund uses leverage or has relevant counterparty exposure. Enhanced reporting would add a deeper account of how the fund is financed, who invests in it and how its portfolio could respond to market stress.

A fund moving across the threshold would not necessarily have to change reporting level immediately. The draft rules include a transition mechanism based on its position in the previous reporting period, intended to prevent a fund that hovers around £500 million from repeatedly switching forms.

Holdings data would give the FCA a direct portfolio view

The proposal would collect holdings for UK UCITS and non-UCITS retail schemes. At present, the regulator often has to infer a fund's exposures from more aggregated fields or seek additional information. A holdings return would let it compare the assets with the fund's objective, strategy and liquidity profile.

That can reveal problems that broad classifications miss. A fund may describe itself as liquid while holding assets that are difficult to sell, concentrate risk in a small number of issuers or drift away from the strategy presented to investors. Holdings data would not prove that a product offers good value or meets a sustainability claim, but it would improve the FCA's ability to identify cases that merit closer supervision.

For investors, this is different from the public documents used to compare a product. The sustainable fund factsheet checklist explains how to assess holdings, benchmarks, fees and exclusions from the material a prospective investor can access. FRAME is principally a supervisory reporting system. The FCA says it intends to publish aggregated and anonymised data where appropriate, rather than each fund's regulatory return.

Which firms and funds would be covered

FRAME reaches beyond one part of the funds industry. It would apply to FCA-authorised UK AIFMs, UK UCITS management companies, managers of registered venture-capital and social-entrepreneurship funds, and third-country AIFMs marketing funds under the National Private Placement Regime (NPPR).

Which UK AIFMs are authorised and how much prescription applies to them is the subject of the FCA's separate three-tier AIFM regime proposal. CP26/28 uses £750 million and £5 billion aggregate manager NAV thresholds; FRAME uses a £500 million fund-level threshold for reporting depth. The two calculations should not be treated as interchangeable.

Operators of funds recognised through the Overseas Funds Regime (OFR) or under section 272 would also report. Some firms operating under the Markets in Financial Instruments Directive (MiFID), including portfolio managers and advisers, would provide a separate manager-level return. Operators of other collective investment schemes would report aggregated activity where appropriate.

A single manager may have authorised retail funds, alternative funds and segregated mandates, each with a different reporting obligation. FRAME provides a shared vocabulary, but the firm would still need an accurate inventory of legal entities, funds, sub-funds, permissions and classifications before it could determine which template and schedule apply.

What firms would need to prepare

The consultation includes prototype spreadsheets and a voluntary test form, so firms can compare the proposed fields with their present systems before the rules are final. The immediate work is less about filling in a return than proving that the underlying records can be reconciled.

1. Map the reporting population. List each manager, operator, fund and sub-fund, then record its legal classification, NAV, domicile, marketing route and reporting frequency.
2. Assign stable identifiers. The FCA proposes wider use of Legal Entity Identifiers (LEIs) so records can be connected across regulatory datasets.
3. Trace each field to a system owner. Holdings, investor categories, fees, flows, liquidity, leverage and valuations may sit in different systems or with third-party administrators.
4. Test the £500m boundary. Firms need a repeatable NAV calculation and a control for funds that move between essential and enhanced reporting.
5. Reconcile classifications. Strategy, liquidity and portfolio fields should agree with authorisation records and investor documents rather than create a second description of the fund.
6. Build a reporting calendar. The frequency and lag vary by product, so a manager with several fund types cannot rely on one annual deadline.

This preparation overlaps with product governance rather than replacing it. The FCA's separate TCFD product-reporting proposal concerns how climate information reaches retail and institutional investors. FRAME concerns the fund data submitted to the regulator. A firm may need to change both systems, but the audiences and disclosure routes are not the same.

The 75% saving would not be shared evenly

The FCA estimates an annual net direct benefit to business of about £111 million. Within that model, AIF managers save around £147.8 million a year because of lower reporting frequency and a large reduction in reporting effort. New UCITS reporting is estimated to cost about £19.6 million a year, while implementation across all firms is expected to cost about £139.8 million once.

These are consultation estimates, not measured outcomes. They depend on assumptions about how long current returns take, the complexity of each proposed field and the number and size of firms affected. A manager that currently files a demanding AIF return may see a substantial reduction. A UCITS manager building regular fund-level reporting for the first time faces a different project.

The FCA therefore expects simplification for existing AIF reporting to outweigh the cost of broader coverage and better data across the sector. An individual firm's budget could look very different.

What FRAME would and would not tell investors

Better regulatory data can help the FCA find inaccurate valuations, liquidity problems, poor-value products and cases where retail clients have been categorised incorrectly. It can also make supervision more targeted by showing which funds have the scale or exposures to create wider harm.

FRAME would not create a new public comparison service for investors. The individual return is supplied to the regulator, and any wider publication is expected to use aggregated and anonymised information. Investors would still need a fund's prospectus, factsheet, costs, holdings, sustainability disclosures and stewardship record to assess the product itself.

For sustainable funds, more consistent portfolio and investor data may support oversight, but it does not certify a fund's environmental objective or remove the need to examine its claims. The FCA sustainability-label guide, sustainable funds guide and active ownership explainer cover those public product and stewardship checks.

Consultation and implementation timetable

The final start date has not been set. It will depend on consultation feedback and firm readiness. Until final rules are published, the thresholds, fields and implementation sequence remain proposals.

Official sources

• Financial Conduct Authority: CP26/26 FRAME consultation page
• Financial Conduct Authority: CP26/26 full consultation paper
• Financial Conduct Authority: proposed FRAME reporting template
• Feature image: Canary Wharf office building by Jue Mue, released into the public domain, via Wikimedia Commons