Following a review of the latest UK Alternative Investment Fund (AIF) data between 2021 and 2025, it found that the top five asset managers hold 28% of the market on a net asset value (NAV) basis.

The report published on Thursday pointed out that assets in private credit available to UK investors had increased by 127% over four years to £335bn, with the number of funds soaring from 381 to 786.

Concerns were raised over a potential credit freeze following a failure at a large asset manager, due to the heavy concentration in private credit assets. It also highlighted that some private credit funds were using significant amounts of leverage at the fund level.

The FCA revealed that in 2025, more than 10% of UK managed private credit funds reported an adjusted leverage ratio exceeding 300% of their NAV, highlighting that under the updated European Union directive for alternative investment managers - AIFMD II - the hard cap on leverage for closed-end funds is 300% and that if any exceed it have to rectify it immediately.

The FCA warned that the report only measured leverage at a fund level, not the amount of leverage used by borrowers in portfolios, despite some concerns private credit assets only represent a “relatively small” part of the wider £5.1 trillion UK AIF market. It highlighted that 90% of the investors in AIF funds were institutional or professionals and there was still limited retail participation.

But, it still used the report as a evidence base to highlight the “limitations” in the current AIFMD reporting system following proposed new “fund reporting for asset management entities” system in July.