The Financial Conduct Authority has published a consultation proposing a minimum 90-day notice period for redemptions from property and other illiquid retail funds, a move that would directly affect SIPP holders, platform operators and model portfolio providers who currently access these assets through daily-dealing vehicles. The FCA illiquid retail funds proposal was released on 8 October 2026, according to Apolifina, and sits within consultation paper CP26/35.
What the FCA illiquid retail funds proposal actually requires
Under the proposals, non-UCITS retail schemes (NURS) with at least 50% of assets invested in inherently illiquid holdings would be required to offer redemptions no more than once a month and impose a notice period before any withdrawal can be processed. The headline figure of 90 days is a floor rather than a fixed point: XPS Investment notes that the FCA proposes the notice period could range between 90 and 180 days, giving managers some discretion over where within that band to set their terms.
The FCA estimates the proposals would affect 17 funds with combined assets of around £7.22bn, of which retail investors hold approximately £3.07bn. That is not a vast corner of the market, but for the SIPP investor or drawdown retiree whose portfolio includes a UK property fund, the operational consequences are immediate and practical.
The regulator’s stated rationale centres on liquidity mismatches. Some funds currently offer daily dealing despite holding assets, such as commercial property or infrastructure, that can take months to sell in an orderly fashion. The FCA warned that this mismatch raises the risk of fund suspensions, investor dilution and forced asset sales during periods of market stress. Several prominent UK property funds suspended dealing during the 2020 pandemic and again following the September 2022 gilt market dislocation, events that illustrated precisely the fragility the regulator is seeking to address.
Portfolio implications for income-seeking investors
For investors in accumulation, a 90-to-180-day notice period is a liquidity constraint to be modelled, not a reason to avoid the asset class altogether. Property and infrastructure can still serve a purpose within a diversified portfolio, providing a degree of income stability and low correlation with listed equities, but the time horizon for accessing capital must be factored into any allocation decision. Over a five-to-ten-year accumulation horizon, a notice period of this length is manageable. In drawdown, it is a different matter.
Sequence-of-returns risk and the practical need to generate monthly income mean that anyone relying on an illiquid fund to meet living costs should treat a potential 180-day gate as a structural constraint on the position size they can prudently hold. The FCA noted that notice periods could allow some managers to reduce cash buffers and invest a greater proportion of assets in their target holdings, which could improve long-term returns. Michelle Beck, director of markets at the FCA, said: ‘Funds should be clear about whether they offer quick access or are built for longer-term investments like property. Our rules will help firms make that clearer and give the market more confidence to invest.’
The proposals would align affected NURS funds with the long-term asset fund (LTAF) regime, which already operates on monthly dealing and a minimum 90-day notice period. Platforms, advisers, model portfolio providers and SIPP operators may need to update their systems to accommodate the new dealing terms, and the FCA has indicated that existing funds would have two years to comply once final rules are in place. Investors would receive at least one year’s notice before any changes take effect.
The consultation closes on 11 December, with final rules expected in the first half of 2027. Investors who hold NURS property funds within a SIPP or ISA should check their provider’s intended approach to the new notice period requirements well before that implementation deadline arrives.
