FCA Proposes 90-Day Notice for Illiquid Asset Funds
The UK regulator has proposed new liquidity rules requiring at least 90 days' notice before investors can withdraw from funds holding assets such as property and infrastructure.
The Financial Conduct Authority has proposed new liquidity rules for UK funds that invest in assets such as commercial property and infrastructure. Under the measures, investors would be required to give at least 90 days' notice before withdrawing money from affected funds.
The liquidity mismatch
At present, some funds holding difficult-to-sell investments offer daily dealing without any advance notice requirement. The FCA said that structure can create pressure when investors seek to exit at the same time. If managers do not hold enough cash, they may have to halt withdrawals or sell assets quickly.
Rapid disposals, the regulator warned, may reduce sale prices, affect those who remain invested and add strain to the wider market. The proposed notice period is intended to give managers additional time to sell holdings in a more orderly way.
The FCA expects the 90-day notice requirement to reduce the risk of liquidity-related suspensions.
Scope of the consultation
The consultation covers authorised fund managers of non-UCITS retail schemes, known as NURS. The FCA classifies assets that cannot usually be sold swiftly without a material loss in value as “inherently illiquid assets”, including property and infrastructure investments.
Fund managers could impose a notice period longer than 90 days where the portfolio or strategy warrants it. The FCA said the proposal is designed to make withdrawal arrangements clearer before investors commit capital, and is intended to improve confidence in funds that allocate to private-market assets.
Compliance timetable
Existing funds would have two years to comply with the requirements. They would also need to give investors at least one year’s advance notice of changes.
According to the FCA, the proposals would bring the UK into alignment with new international liquidity standards for open-ended funds. Responses to the consultation are due by 11 December 2026.
Clarity for investors
FCA markets director Michelle Beck said: “Funds should be clear about whether they offer quick access or are built for longer-term investments like property. Our rules will help firms make that clearer and give the market more confidence to invest.”
The outcome of the consultation will shape how UK vehicles with exposure to illiquid assets — including property and infrastructure portfolios held by private clients and advisers — structure redemption terms and investor communications.
