The Financial Conduct Authority has opened a consultation proposing a minimum 90-day notice period for investors seeking to withdraw from certain retail funds invested mainly in assets that can take a long time to sell. The proposals would also limit those funds to dealing with redemptions no more frequently than monthly.
The measures concern non-UCITS retail schemes, or NURS, with at least half the value of their holdings in assets classified as inherently illiquid. Such assets can include property and infrastructure investments. The proposed rules are intended to bring the timing promised to investors closer to the time a fund may need to sell underlying holdings to raise cash.
Why redemption timing matters
Open-ended funds allow investors to request their money back, but their underlying investments may not be readily saleable. A property asset, for example, can take considerably longer to find a buyer and complete a sale than a publicly traded share. If a fund offers frequent withdrawals while holding assets that cannot be sold quickly, managers may need to meet requests from cash reserves or by selling more liquid holdings first.
That mismatch can create pressure when many investors seek to withdraw at once. Managers may have to consider how to meet requests fairly while avoiding rushed sales of assets that are difficult to value or dispose of. The consultation frames redemption terms as one part of liquidity management, not as a guarantee that investors will always be able to access money on a particular date in every circumstance.
Under the FCA’s proposal, an in-scope NURS would offer redemption dealing at most monthly and require at least 90 days’ notice. The threshold is based on the proportion of scheme property invested in inherently illiquid assets, rather than on whether a fund is commonly described as a property fund. The regulator is also proposing changes to how the relevant asset category and the scope of the existing regime are defined.
More prominent information for investors
The proposed changes go beyond the timetable for submitting a redemption request. They include clearer explanations of restrictions before an investment is made, including that proceeds may not be paid until a notice period has ended and that the value of an investment can move during that period. The consultation also addresses disclosures about deferrals and suspensions, when a fund may not be able to process withdrawals as usual.
These details matter for people who hold fund investments indirectly. Relevant exposures may sit inside pension or savings arrangements or life assurance policies, rather than in an account an investor recognises as a direct holding in a fund. The proposals also have implications for fund managers, investment platforms, advisers, pension operators and other firms involved in distributing or administering such investments.
The proposed framework would align redemption terms with the liquidity of the assets, while recognising the role private markets can play in investment portfolios. It does not designate funds holding illiquid assets as unsuitable in every case. Instead, the changes are intended to make the conditions for getting money back more consistent with the nature of the investments and clearer to prospective investors.
Other parts of the consultation consider how redemption requests would be handled during suspensions and deferrals. Those proposals are intended to address the operation of limited-redemption funds, but they remain under discussion. The final design may change after responses are considered, and no outcome should be treated as settled while consultation is open.
Consultation remains open
The consultation opened on 8 October 2026 and closes on 11 December 2026. The FCA expects to consider responses and publish final rules in the first half of 2027. Until then, the proposed notice period and dealing frequency are not requirements in force as a result of this consultation.
For investors, the central issue is the trade-off between access and the time needed to sell underlying holdings. A longer notice period could affect when a withdrawal request can be completed, so the proposed disclosures would make those terms more visible before people commit money. For firms, the consultation raises practical questions about processing requests, communicating with customers and accommodating the terms across platforms and linked products.
The consultation invites feedback on whether the proposed minimum terms and accompanying protections are appropriate. Its eventual rules will depend on the feedback and the regulator’s subsequent decisions. Investors should distinguish the proposals from existing terms that apply to any particular fund and review the documents governing their own investments.
