Growth of private markets under scrutiny: What a UK inquiry means for fund managers
In July 2025 the House of Lords Financial Services Regulation Committee launched an inquiry into the rapid growth of private markets in the UK. The inquiry will examine whether post‑2008 capital and liquidity requirements have pushed lending activity away from traditional banks and into private equity, venture capital and other unregulated channels. It also seeks evidence on whether risk has migrated from the banking sector to private markets, and how much visibility the Bank of England has over these activities and their linkages to the broader financial system. Stakeholders are invited to submit data and commentary by 18 September 2025, signalling that regulatory questions will dominate the coming months.
Why this matters for private market managers
The Committee’s questions go beyond academic curiosity. If regulators conclude that risk has shifted dramatically into private markets, new oversight and reporting obligations could follow. For UK GPs, this inquiry is a sign that policymakers are re‑examining the rules that have allowed private funds to flourish in the decade since the financial crisis. The focus on capital and liquidity requirements suggests that leverage, valuation practices and counterparty exposures may come under the microscope.
While no immediate changes have been proposed, the inquiry highlights the importance of preparedness. Firms that can demonstrate robust risk management, transparent reporting and strong governance will be better positioned to respond to any future rules. Participating in the call for evidence is also an opportunity to shape the narrative and share insights on the positive role private funds play in financing growth.
Preparing for regulatory scrutiny
To stay ahead of potential reforms, fund managers should:
Engage with the inquiry. Review the Committee’s questions and contribute data or commentary that demonstrates the sector’s discipline and economic value. Collaboration through industry bodies can amplify your voice.
Strengthen internal risk management. Ensure that leverage, liquidity and counterparty exposures are measured and monitored at both fund and portfolio levels. Document decision-making processes and stress test assumptions.
Enhance reporting transparency. Investors and regulators alike expect more granular information. Adopt technology that consolidates capital flows, valuations and investor communications in a single portal.
Digitise compliance workflows. Automating AML/KYC checks, subscription agreements and regulatory filings reduces operational risk and creates a verifiable audit trail.
Monitor policy developments. Keep up to date with consultations and potential changes to the Alternative Investment Fund Managers Directive (AIFMD), Senior Managers & Certification Regime (SMCR) and UK AIFM rules.
At FundTech Solutions we’re already helping GPs digitise their investor lifecycle and compliance workflows. Our white‑label platform provides automated onboarding and integrated reporting, making it easier to showcase your governance and risk management capabilities.
The bottom line
The House of Lords inquiry signals that private markets are on the policymakers’ radar. While the outcome is uncertain, the direction of travel points toward greater transparency and oversight. By engaging proactively, strengthening operations and embracing digital tools, fund managers can influence the discussion and remain ahead of any regulatory shifts. In a landscape where trust and compliance are increasingly critical, taking a proactive approach will not only ensure readiness but also enhance your attractiveness to investors.