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In its February 2023 DP23/2 discussion paper, Updating and improving the UK regime for asset management, the FCA said it 'hoped to be able to consult on rule changes to establish' Direct2Fund.

In our May 2023 response to the paper, we encouraged them to do so, and provided our analysis of the regulatory changes that may be necessary.


Direct2Fund ('D2F') is the optional, alternative investor-fund dealing model for UK funds.

D2F enables investors to transact directly with their desired investment fund, bypassing the Authorised Fund Manager (AFM). The AFM has traditionally acted as a counterparty between investors and the funds they offer.

Removing the AFM from the chain:

  • Replicates as much as possible the model operated in a number of non-UK fund domiciles (such as Luxembourg and Ireland);
  • Eliminates completely the small risk of loss to the investor arising from a failure of the AFM (and remove the majority of the applicability of CASS);
  • Bolsters the competitiveness of the UK investment management industry and delivers the best possible outcome for investors, business and the UK economy.

Adoption of the D2F model is intended to be optional and can run alongside the existing model.

This proposal originally formed a part of a wider set of initiatives from the:

D2F mode comparison

Visual comparison


D2F analysis

Regulatory & Legal Analysis, dated May 2023 - an executive summary of the regulatory changes that may be necessary to implement D2F 

D2F cover

Update, dated March 2022 - provides updates on IA work and highlights the conclusions of an extensive legal and regulatory analysis, and intended next steps for the Direct2Fund initiative.


John Allan | Head of Innovation and Operations Unit

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