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The second half of June delivered the fortnight’s defining story for anyone running or governing a fund. On 26 June 2026 the FCA published CP26/21, proposing targeted changes to the UK Listing Rules for closed-ended investment funds, taking direct aim at conflicts of interest in the relationship between investment trusts and their managers. Closing on 14 August, it is the sharpest regulatory intervention in the investment trust structure in years, and it arrives as activist capital is already reshaping the sector from the outside. The board-manager relationship, long treated as settled, is now the object of rulemaking.
The FCA moved on several other fronts. It set its landmark crypto rules on 30 June, finalising the Handbook framework for a regime that commences in October 2027; refined the Consumer Duty on 29 June to lift genuinely non-UK business out of scope for wholesale firms; and opened CP26/20 on SIPP due diligence and asset protection on 22 June. The PRA published its Annual Report and market-risk consultation CP9/26, while the Bank of England launched a private markets stress scenario that puts fund liquidity under the macroprudential microscope. Therese Chambers used a keynote to signal that enforcement is becoming faster, quieter and more technological. The common thread is a regulator reaching into structures and relationships it once left to the market.
The FCA Puts the Investment Trust Board-Manager Relationship Under the Rulebookdummyanimatedrotating
On 26 June 2026 the FCA published CP26/21, consulting on targeted changes to Chapter 11 of the UK Listing Rules, the chapter governing listed closed-ended investment funds, with responses due by 14 August 2026. The focus is narrow but consequential: how conflicts of interest are managed in the investment management relationship that sits at the heart of every investment trust. It follows the targeted review of the listing rules for investment entities the FCA announced on 3 March 2026.
Closed-ended funds are a hybrid, listed companies and investment vehicles at once. Shareholders appoint a board, the board appoints and oversees the manager, and shareholder rights are the mechanism that holds the whole structure to account. The FCA’s proposals reach into the plumbing of that accountability. Where a substantial shareholder holding 20 percent or more of voting rights is also the investment manager, or an associate of the manager, the rules would restrict their voting on relevant resolutions. Related-party transaction rules would expressly capture the manager and its group.
- Conflicts at the centre: The manager’s contract is the single most important determinant of shareholder outcomes, and the FCA is legislating for how conflicts around it are handled.
- Voting restrictions: Manager-aligned substantial shareholders would be restrained from voting on resolutions where their interest and shareholders’ interests diverge.
- Shareholder rights: Alongside the consultation the FCA published good-practice guidance to help retail investors exercise their voting rights, a deliberate push on engagement.
- Careful calibration: Jon Relleen, the FCA’s director of infrastructure and exchanges, stressed the changes are targeted and that the regulator does not intend to interfere with voting or shareholder engagement.
The timing is not accidental. The investment trust sector is already in ferment, with activist investors pressing boards on discounts, mergers and wind-downs across the market. A rulebook that strengthens shareholder rights and constrains manager conflicts lands into a battle that is being fought contract by contract. For managers of listed vehicles, the governance terms that were once boilerplate are now a supervisory and reputational exposure.
This is the FCA doing something it rarely does: reaching into the internal governance of a fund structure rather than regulating its disclosures. Boards of investment trusts and their managers should read CP26/21 as a signal that the management contract, the conflicts policy and the voting architecture are all now in scope. Chairs should ask their sponsors before 14 August whether the trust’s current arrangements would survive the proposed rules, and where the manager’s interests and shareholders’ interests are permitted to touch.
Regulatory Updates
FCA Sets Landmark Crypto Rules to Anchor the UK Regimedummyanimatedrotating
On 30 June 2026 the FCA published its final rules and guidance for regulated cryptoasset activities, the culmination of the crypto roadmap and underpinned by the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 made by Parliament on 4 February 2026. The rules will apply to firms granted permission under FSMA on or after 25 October 2027, when the regime commences, with authorisation applications opening from September 2026.
- The core package: PS26/13 applies the FCA Handbook to crypto firms, supported by finalised guidance on the Consumer Duty (FG26/5), operational resilience (FG26/6) and international firms (FG26/7).
- Full Handbook obligations: The Duty, COBS, SM&CR, operational resilience and financial crime frameworks are being applied across regulated crypto activities, not a lighter parallel regime.
- Joint stablecoin approach: The FCA and the Bank of England set out a coordinated approach to the regulation of systemic stablecoin issuers.
The significance for traditional managers is not that they will trade crypto, it is that the FCA has now shown its template for regulating a new activity: full Handbook obligations, the Duty, SM&CR and operational resilience from day one. Any manager eyeing tokenised funds or digital asset exposure should read these rules as the standard they will be held to, not a niche crypto concern.
Consumer Duty Steps Back From Wholesale and Non-UK Businessdummyanimatedrotating
On 29 June 2026 the FCA proposed removing business for genuinely non-UK customers from the scope of the Consumer Duty, part of CP26/23 on Duty scope and proportionality in wholesale markets, closing on 19 September 2026. The change responds to the 2025 Mansion House ask to address the Duty’s application to wholesale firms, and for many investment banks it will take a significant proportion of relevant revenues out of scope.
- Clearer boundaries: Market making, custody and safeguarding should not normally be caught, with worked examples of activities that fall outside the Duty.
- Distribution-chain clarity: Firms will be able to rely on others in a chain to meet their obligations, provided they act in good faith and respond to clear signs of harm.
- Insurance alongside: CP26/22 simplifies insurance rules and narrows ICOBS and PROD 4 territorial scope on the same day, closing 4 September 2026.
Simon Walls put it plainly: it is a consumer duty, not a wholesale one. The relief is real, but the risk is a false sense of exemption. The high-level Principles and SYSC obligations remain, and drawing the line between in-scope retail manufacture and out-of-scope wholesale activity will require judgement your first line must document. Treat the carve-out as a mapping exercise, not an escape hatch.
FCA Consults on Consistent Standards for the SIPP Marketdummyanimatedrotating
On 22 June 2026 the FCA opened CP26/20, proposing clearer due diligence obligations for SIPP operators and a new Pension Scheme Money and Assets regime, with responses due by 24 August 2026. The SIPP market has grown to roughly 567 billion pounds of assets under administration across 5.3 million consumers as at 2024, and the FCA has historically found cases of poor due diligence, weak record keeping and gaps in asset protection.
- Due diligence standards: Clearer Handbook rules would set out key due diligence obligations, focused on higher-risk, non-mainstream investments.
- Asset protection: The new Pension Scheme Money and Assets regime targets the risk of consumer harm when firms fail or wind down, particularly where unauthorised trustees are used.
- Duty alignment: Charlotte Clark framed the proposals as complementing the Consumer Duty by making clear what good practice looks like across all SIPP operators.
The board-manager relationship, long treated as settled, is now the object of rulemaking.Asad Bukhory
PRA Developments
PRA Advances Basel 3.1 Market Risk in CP9/26dummyanimatedrotating
On 19 June 2026 the PRA published CP9/26, consulting on adjustments to the internal model approach for market risk under Basel 3.1, with responses due by 18 September 2026. The paper refines the market-risk framework while confirming that the implementation date for the internal model approach remains 1 January 2028, keeping the near-final rules in PS9/24 intact.
- Timeline held: The 1 January 2028 implementation date for the internal model approach is preserved, giving trading firms a fixed planning horizon.
- Basel coherence: The adjustments keep the standardised and internal approaches aligned with Basel standards while reducing operational friction.
For designated investment firms with trading books the message is continuity, not surprise. The value is in the certainty: the PRA is signalling that the 2028 date will not move again, so build the implementation plan around it now rather than betting on further delay.
PRA Publishes Its Annual Report and Competitiveness Accountingdummyanimatedrotating
On 25 June 2026 the PRA published its Annual Report 2025/26, covering activities for the year to 28 February 2026, alongside its report on delivery of the secondary competitiveness and growth objective and the Cost Benefit Analysis Panel’s annual report. Together they show a regulator being held, and holding itself, to account for how prudential rigour and economic growth are balanced.
- The growth mandate: The competitiveness and growth accounting reflects the statutory secondary objective now shaping how the PRA calibrates and justifies its rules.
- Cost-benefit discipline: The CBA Panel report signals that proportionality and evidenced cost-benefit analysis are becoming embedded in PRA policymaking.
Fund Launches
Baillie Gifford Launches the UK's First Fully Native Tokenised Funddummyanimatedrotating
Baillie Gifford launched what it describes as the UK’s first fully native tokenised mutual fund, regulated by the FCA and built in partnership with New York-based BNY, reported on 22 June 2026. The manager framed the vehicle as a global blueprint for how a regulated open-ended fund can be issued and administered on tokenised infrastructure.
- Native tokenisation: The fund is built natively on tokenised rails rather than retrofitting a token wrapper onto a conventional structure.
- Regulatory first: It arrives as the FCA finalises its crypto rules and progresses fund tokenisation policy, connecting a live product to the emerging framework.
Saba Targets 500 Million Dollars for a UK Investment Trust Activist Funddummyanimatedrotating
Saba Capital was fundraising for a targeted 500 million dollars to launch a fund taking activist positions in UK investment trusts holding listed equity, reported by Investment Week on 25 June 2026. The vehicle formalises the activist campaign Saba has been running against UK trusts, and follows its launch of a UK Investment Trust UCITS ETF.
- Activism institutionalised: A dedicated 500 million dollar vehicle turns opportunistic pressure on trust boards into a standing strategy.
- Direct read-across: The raise lands in the same fortnight as CP26/21, sharpening the pressure on trust boards from both regulator and market at once.
Enforcement
Chambers Signals a Faster, Quieter, More Technological Enforcementdummyanimatedrotating
On 17 June 2026 Therese Chambers, joint executive director of enforcement and market oversight, told the International Bar Association Anti-Corruption Conference that financial crime is becoming faster, more complex and more widespread, accelerated by technology and AI. Her message was that enforcement is more than headline fines: it is the quieter work of supervision, market oversight and proactive detection, backed by the credible threat of enforcement to step in before harm escalates.
- The 4 Ps: Chambers borrowed law enforcement’s prevent, pursue, protect and prepare framing, positioning the FCA to intervene earlier rather than only punish later.
- Technology cuts both ways: AI is making crime cheap, fast and invisible, and the FCA is leaning on data and technology to close the gap between harm and response.
The strategic tell is the phrase credible threat. The FCA wants firms to act on the expectation of enforcement, not the certainty of it, which shifts the burden onto your own systems and controls under SYSC. Financial crime frameworks that were built for a slower threat need re-testing against an AI-accelerated one. This is a board-level assurance question, not a MLRO housekeeping task.
Market Developments
The Bank of England Puts Private Markets Under a Stress Scenariodummyanimatedrotating
On 19 June 2026 the Bank of England launched the scenario phase of its private markets system-wide exploratory scenario, a voluntary exercise run under the Financial Policy Committee and Prudential Regulation Committee and supported by the PRA, FCA and The Pensions Regulator. It is the first system-wide stress exercise aimed specifically at private markets, and the Bank will share initial findings in the July Financial Stability Report, with interim results later in 2026 and a final report in 2027.
- Why it matters now: The exercise arrives as private credit meets real redemption pressure, testing whether liquidity, leverage and valuation interact dangerously under stress.
- Regulators aligned: The FPC, PRA, FCA and TPR are running this together, a signal that private-market risk is now a shared supervisory priority.
Fund managers with private-market exposure should treat participation, and the questions the scenario asks, as a preview of future supervisory expectations. If your firm is asked to model a private-markets drawdown and cannot produce credible liquidity and valuation paths quickly, the exercise will have found the gap for you. Boards should be requesting a dry run before the regulator requests the real one.
Tokenisation Reaches a Credibility Thresholddummyanimatedrotating
Industry research reported in late June found tokenisation reaching a credibility threshold, with around half of asset managers moving toward adoption, even as the industry pressed the FCA and Bank of England to provide certainty on the regulatory treatment of tokenised assets. Baillie Gifford’s native tokenised fund gave the trend a concrete UK example within the same fortnight.
- From pilot to production: Adoption is shifting from proofs of concept to live products, raising the stakes on operational resilience and custody controls.
- Certainty demanded: Managers want clarity from the FCA and Bank of England before committing at scale, echoing the crypto framework finalised on 30 June.
Calendar
July 2026
- 1 Jul PRA CP6/26 on high loan-to-income lending closes.
- 7 Jul Bank of England Financial Stability Report and Financial Policy Committee Record, including first private markets scenario findings.
- 9 Jul FCA CP26/16, registration of authorised fund assets, closes.
- 13 Jul FCA CP26/17 Quarterly Consultation No. 52, Chapters 2 to 7, closes.
- 28 Jul FCA CP26/18 mortgage rule review closes.
August 2026
- 10 Aug FCA CP26/19, penalty and decision-making policy changes, closes.
- 14 Aug FCA CP26/21, listing rules for closed-ended investment funds, closes.
- 24 Aug FCA CP26/20, SIPP due diligence and asset protection, closes.
September 2026
- 1 Sep New non-financial misconduct guidance takes effect (PS25/23, COCON 1.1.7FR).
- 4 Sep FCA CP26/22, simplifying the insurance rules, closes.
- 18 Sep PRA CP9/26, Basel 3.1 internal model approach for market risk, closes.
- 19 Sep FCA CP26/23, Consumer Duty scope and proportionality in wholesale markets, closes.
Key Dates Later in 2026 and Beyond
- Sep 2026 Crypto firms can begin applying to the FCA for authorisation.
- 1 Jan 2027 Basel 3.1 standards take effect in the UK.
- 25 Oct 2027 New UK cryptoasset regulatory regime commences.
- 1 Jan 2028 Basel 3.1 internal model approach for market risk implementation.
The FCA is proposing to write conflicts of interest between an investment trust and its manager into the Listing Rules, and activist capital is pressing the same boards from the outside. If your trust’s management contract, conflicts policy and voting arrangements were tested against CP26/21 today, would they survive, and could your chair explain to shareholders where the manager’s interests are still permitted to touch theirs?
We’d welcome your perspective. The best responses may feature in a future edition.
The connecting thread across late June is a regulator moving from the perimeter to the interior. CP26/21 does not regulate what an investment trust discloses, it regulates how its board and manager relate. The crypto rules apply the full Handbook to a new activity from day one. The Consumer Duty carve-out redraws the line between wholesale and retail. In each case the FCA is making judgements about structure and relationship that it once left to markets and contracts.
For fund managers this raises the governance bar in a concrete way. It is no longer enough to disclose a conflict, a manager may soon have to demonstrate that the architecture around it, voting, related-party controls, board oversight, actually constrains it. The same standard runs through the crypto framework and the Bank of England’s private markets scenario: show me the mechanism, not the policy statement. Governance is being asked to prove it works, not merely that it exists.
The step this fortnight is to read your own structure the way a supervisor now will. Chairs of listed vehicles should test their arrangements against CP26/21 before 14 August. Managers eyeing tokenisation should hold themselves to the crypto rulebook. And any firm with private-market exposure should run its own liquidity and valuation drawdown before the Bank of England’s scenario runs it for them. The pattern is set: the regulator is inside the structure now, and the firms that map their own conflicts first will be the ones not explaining them later.
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