The FCA’s PS25/4: Revisiting research bundling in the UK – What fund managers and providers need to know

Posted on: 25 July 2025

Written by: Tom Lockwood

Published in May 2025, the FCA’s Policy Statement PS25/4 introduced a significant regulatory shift for UK fund managers. While the policy came into effect two months ago, its practical implications are only now beginning to be addressed across the sector.

As initial reactions give way to implementation planning, this is a timely moment to reassess the operational, governance, and commercial impact of the new regime—and how best to align with it.

A departure from MiFID II

The FCA’s latest policy permits UK-authorised fund managers to pay for investment research and execution services on a bundled basis. This marks a notable divergence from the MiFID II regime, which required unbundling of research and execution costs across the EU.

The change forms part of the UK’s broader ambition to enhance the global competitiveness of its capital markets post-Brexit, while maintaining high standards of investor protection and governance.

Who does it apply to?

PS25/4 applies to UK UCITS management companies and UK AIFMs (full-scope and small). It covers only the collective portfolio management of UK-authorised funds—namely UCITS schemes, Non-UCITS Retail Schemes (NURS), and Qualified Investor Schemes (QIS).

It does not apply to segregated mandates or to MiFID-authorised discretionary or advisory services provided to clients outside of an authorised fund structure.

What’s changed?

Fund managers may now, subject to appropriate safeguards, opt to pay for research and execution jointly. This removes the requirement to fund research solely from a firm’s own resources or via Research Payment Accounts (RPAs)—a model that was often administratively complex and commercially challenging, particularly for smaller firms.

However, the new regime is not a return to soft commission or bundled opacity. Firms must implement and maintain:

Written policies governing research procurement
Documented research budgets, whether by fund, strategy, or product range
Fair and proportionate cost allocation across vehicles
Annual value assessments of acquired research
Enhanced investor disclosure and governance oversight

Why it still matters – two months on

Although the rules have been in force since May, many firms are only now considering whether to adopt the joint payment model. For some, this delay reflects a prudent approach to governance change; for others, competing priorities have pushed implementation down the agenda.

But action is now required. Boards, fund administrators, and oversight committees will expect clarity on whether the firm intends to rebundle—and if so, how this will be governed and disclosed.

Implications across the value chain

For fund managers, PS25/4 presents an opportunity to streamline research procurement, restore access to high-quality third-party insight, and reduce internal complexity. It may be particularly valuable for managers operating in mid- and small-cap segments, where research coverage has diminished in recent years.

For brokers and execution venues, the change creates new commercial opportunities—but only if these services are delivered in line with best execution and conflict management requirements under COBS and SYSC.

Research providers may also see renewed demand, provided they adapt pricing and coverage models to the revised regime. At the same time, cross-border firms must be alert to increasing regulatory divergence between the UK and EU, ensuring their frameworks and disclosures accommodate both.

What Firms should be doing now

Engage internally: Ensure fund governance, compliance and investment teams have assessed the potential benefits and obligations of adopting the joint payment model.
Update documentation: Prepare or revise research policies, budget procedures, client communications, and commission-sharing arrangements as necessary.
Clarify cross-border position: For firms with EU clients or affiliates, ensure contractual and procedural separation between jurisdictions.
Consult with service providers: Brokers, platforms, and compliance partners must align with managers’ chosen models to ensure consistent execution and disclosure.

Need support navigating the transition?

At Cosegic, we’re supporting of UK fund managers, platforms, and investment firms as they adapt to the evolving research payment landscape. Whether you're considering whether to rebundle, reviewing your governance framework, or navigating the cross-border complexities of operating across UK and EU markets, we can help.

Get in touch to explore how we can support your transition under PS25/4.