FCA Proposes Single Remuneration Code (SYSC 19AA): What It Means for UK Asset Managers

The Financial Conduct Authority published Consultation Paper CP26/27 on 14 July 2026, setting out a proposal to replace three separate, overlapping remuneration codes with a single unified rulebook for firms it regulates on its own, without joint PRA oversight. If adopted, the change would consolidate the AIFM Remuneration Code (SYSC 19B), the UCITS Remuneration Code (SYSC 19E) and the MIFIDPRU Remuneration Code (SYSC 19G) into one new code, designated SYSC 19AA. It's worth being precise about where this sits in the process: this is a consultation, not a finalised rule. Responses are due by 16 September 2026, and the FCA expects to publish a Policy Statement confirming the final shape of the rules sometime in the first quarter of 2027.

The problem the FCA is trying to solve is a specific kind of regulatory fatigue that's built up since Brexit. All three existing codes trace back to EU reforms introduced after the 2008 financial crisis, designed originally to curb excessive risk-taking inside banks, then extended outward to cover fund managers and investment firms whose business models, risk profiles and incentive structures look very different from a bank's trading desk. A firm managing both a UCITS fund and an alternative investment fund has historically had to run separate bonus policies, separate deferral schedules, and separate Material Risk Taker lists for what can be the exact same senior staff, purely because the underlying fund wrapper triggers a different rulebook. The FCA's stated aim in CP26/27 is to move away from that kind of detailed, prescriptive, banking-modelled approach toward a more outcomes-focused framework — one relying more heavily on firms' own governance judgement to justify why their pay structures are appropriate, rather than ticking through a long list of banking-style mechanical requirements.

Scope is one of the more consequential technical details in the proposal, and worth being specific about rather than assuming the new code applies uniformly to everyone. It would apply to full-scope UK AIFMs initially, extending to medium and large UK AIFMs once a parallel piece of reform to the UK's AIFM regime (consulted on separately, in CP26/28, with its own later deadline of 14 October 2026) takes effect. UK UCITS management companies would remain in scope throughout. For MIFIDPRU investment firms specifically, the proposal goes further than simple consolidation: small and non-interconnected firms — the smallest tier under the MIFIDPRU prudential framework — would be removed from remuneration rules entirely, with the new code applying only to larger, non-SNI MIFIDPRU firms. And critically, none of this touches banks or building societies subject to dual FCA and PRA regulation, which remain under the separate Dual-Regulated Firms Remuneration Code, SYSC 19D — that regime isn't part of this consultation and isn't being changed by it.

On the substance of the proposed rules themselves, the Material Risk Taker definition — the criteria used to identify which staff are subject to the code's toughest pay restrictions — would be narrowed and refocused. Rather than a broad, mechanically-applied banking-style test, the proposed definition centres on staff whose activities or incentive structures have a material impact on a firm's conduct toward clients or investors, on investor interests specifically, or on the firm's own regulatory compliance. That's a deliberately more judgement-based test than the current codes apply, consistent with the FCA's broader outcomes-focused framing for this reform. Beyond the MRT definition, the consultation covers harmonising deferral periods for variable pay, rules on paying part of variable compensation in fund units or equivalent instruments rather than cash, and how malus and clawback — the mechanisms allowing firms to reduce or reclaim already-awarded pay following poor conduct or performance — would work consistently across firm types that currently each apply their own version of these mechanics.

For compliance teams and reward committees, the practical timeline matters as much as the substance. Even in the fastest realistic scenario, new rules wouldn't take effect until the day after the Policy Statement is published in early 2027, and even then they'd apply only to remuneration relating to performance periods beginning on or after that commencement date — not to pay already in motion. Firms whose performance periods run on a calendar-year basis may find they can't actually take advantage of the new framework's added flexibility until their 2028 performance period, depending on exactly when the final rules land relative to their existing pay cycle. That gives firms real, if not unlimited, runway to prepare rather than an immediate compliance deadline.

None of the specific mechanics here should be treated as settled. The FCA has explicitly framed CP26/27 as a proposal open for industry feedback, and consultation responses can and do shape final rules — sometimes substantially — between a paper like this and the eventual Policy Statement. What's already fairly clear is the direction of travel: a genuine simplification of a fragmented, banking-derived compliance landscape that's long frustrated multi-strategy asset managers, in exchange for a framework that asks firms to exercise more of their own governance judgement rather than follow a longer list of prescriptive rules. Firms operating across UCITS, AIFM and MIFIDPRU structures have a clear practical reason to engage with the consultation directly before it closes, rather than waiting to react to whatever the FCA finalises in 2027.