FCA Imposes 90-Day Redemption Notice for Illiquid Investment Funds

The UK’s Financial Conduct Authority just dropped a rule that fund managers can’t ignore. Investors wanting to pull money from long-term investment funds — think property, infrastructure — must now give 90 days’ notice before redeeming. No more daily withdrawals with zero warning.

The FCA’s consultation paper, CP26/35, lays out the full framework. It targets authorized fund managers running non-UCITS retail schemes, known as NURS, that hold what the regulator calls “inherently illiquid assets.” Real estate. Infrastructure projects. Assets that can’t be converted to cash quickly without taking a serious hit on price. The old setup let some funds offer daily redemptions with no notice requirement at all — and during volatile stretches, that created real problems. Funds suspended payments. Managers scrambled to hold extra cash buffers just in case. Those cash buffers dragged down actual asset investment. And when redemption pressure spiked, managers sometimes had to sell assets fast, at bad prices, hurting the investors who stayed behind. The 90-day rule is basically the FCA saying: enough of that.

Not a surprise they moved here.

What the 90-Day Rule Actually Changes

With 90 days of advance notice, fund managers get a real window to liquidate assets in an orderly way. No fire sales. No forced discounts. Managers can plan, sequence asset sales properly, and protect the fund’s remaining investors from the collateral damage of rushed exits. And if a fund’s asset mix is particularly illiquid — certain infrastructure plays, for instance — managers can extend the notice period beyond the 90-day minimum. The FCA built that flexibility in deliberately, so the rule doesn’t become a one-size-fits-all straitjacket.

Existing funds aren’t getting hit with an overnight deadline either. They’ve got a two-year compliance window, with a requirement to notify investors at least one year before the new terms kick in. That’s probably reasonable given how operationally complex some of these funds are. Still, two years moves fast when you’re restructuring redemption terms across a large fund.

Michelle Beck, the FCA’s Director of Markets, put it plainly: investors need to know whether a fund offers quick access or is built for long-term commitments. Those are fundamentally different products, and blurring the line between them is where things go wrong. Her point is pretty much the core of why this rule exists.

Aligning With International Liquidity Standards

The FCA isn’t operating in a vacuum here. The 90-day notice requirement is part of a broader push to align UK standards with international liquidity norms for open-ended funds. Other major markets have moved in similar directions after watching liquidity mismatches cause real damage — property funds gating investors, panic redemptions cascading into forced sales. The UK wants to get ahead of that, or at least not fall behind where global standards are heading.

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CP26/35 is the FCA’s detailed blueprint. It covers fair redemption terms specifically for funds holding illiquid assets, and it’s asking the industry for feedback by December 11, 2026. That’s the hard deadline. The FCA wants to hear from stakeholders — particularly fund managers — before finalizing anything. What works on paper doesn’t always work in practice, and the regulator seems aware that fund structures vary enough to warrant genuine input.

Fund managers are being pushed to look hard at their current strategies. Do their notice periods match the actual liquidity profile of what they hold? Can they realistically meet redemption requests within whatever window they’re currently offering? For some, the 90-day rule probably formalizes what they were already doing informally. For others, it’s a genuine operational shift.

There’s also a communication angle here that’s easy to underestimate. The FCA wants clearer distinctions between fund types — funds designed for quick access versus those built around long-term capital deployment. Investors, especially retail ones, don’t always read the fine print. Clearer labeling and clearer redemption terms mean fewer situations where someone expects to pull their money out in a week and discovers their property fund needs three months.

That gap between expectation and reality is where disputes happen. And where market stress gets amplified.

What Fund Managers Need to Do Now

The two-year transition clock is running. Managers need to assess their asset composition, figure out whether 90 days is actually sufficient for their specific holdings, and decide whether to extend the notice period further. They need to start drafting investor communications — the one-year notice to investors before new terms apply isn’t optional. And they probably want to engage with CP26/35 directly, submitting feedback before the December 11, 2026 deadline if they’ve got concerns about how the proposals work in practice.

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The FCA isn’t just setting a minimum here. It’s pushing the whole sector toward a more honest conversation about liquidity. Funds that hold assets which can’t be sold quickly shouldn’t be pretending otherwise. That’s the underlying logic, and it’s hard to argue with.

Managers who extend the notice period beyond 90 days based on their asset requirements are explicitly allowed to do so under the new framework.