New sweeping Companies House reforms under the ECCTA are forcing fund managers to pay attention. With fraud cases up 50% among fund managers in 2024, Sophie White, Associate Director – Funds at Vistra, outlines the key changes, the risks of inaction, and practical steps to take to stay compliant and protect their reputation.
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) is the most significant reform to Companies House since its inception in 1844. Under the Act, the Government aims to tackle rising instances of fraud, increase transparency, and strengthen trust.
The ECCTA reforms also impact organisations with multiple entities and overseas directors. For fund managers, particularly those structured in this manner, the ECCTA cannot be ignored.
New compliance burdens are already here, with the Failure to Prevent Fraud offence in effect since the start of September 2025. With fraud cases among fund managers increasing by 50% in 2024, and 39% of UK directors surveyed by Vistra in July being completely unaware of these impending deadlines, fund managers must take urgent action.
These are the changes fund managers need to be aware of, why they can’t afford to ignore them, and the practical steps to take to achieve compliance.
What’s changing?
Under the ECCTA, Companies House has new powers to scrutinise and reject inaccurate information, strengthen checks on inaccurate information, and clamp down on fraudulent filings.
The Failure to Prevent Fraud offence came into effect on 1st September 2025, holding firms criminally liable for fraud committed by employees or associates unless a firm has reasonable procedures in place to prevent it.
Meanwhile, the transition period for ID verification for directors, persons with significant control (PSCs), and LLP members has also begun, with the period for mandatory verification coming into effect on 18th November 2025. Those fund managers who are affected will have a year to comply following this.
Further changes to LPs are expected in 2026, affecting nearly 60,000 businesses. LPs will be required to provide partners’ details, including names, dates of birth and residential addresses, update changes to funds contributions, and make audited accounts available to HMRC. LPs must also have a registered office in the UK within the same constituent country, offer a standard industrial classification code, and file annual confirmation statements, as well as file their information through an Authorised Corporate Service Provider (ACSP).
The operational impact of these reforms is significant. Fund managers must get on top of housekeeping, including reviewing LP structures and records, or face having to adapt to a tsunami of new regulations.
Why act now?
The response to these reforms has been slow. Less than 5% of affected directors/PSCs have completed mandatory ID verification as of August 2025, according to Companies House.
The potential for technical issues and backlogs should be a concern for fund managers. With nearly 7 million yet to complete ID verification, bottlenecks could easily arise. Companies House has encouraged firms to act now and ‘save time later’, and confirmed at the Corporate Governance Institute’s annual conference that it will remove all companies linked to non-verified individuals from the register after the deadline.
This hard-line stance, regardless of technical issues or backlogs, makes complacency a risk for fund managers. Compliance isn’t always easy. For example, fund managers may not realise that ID verification through Companies House is limited to biometric documents and UK driving licences. Overseas directors and those reliant on paper documents will need to use ACSPs to sort this.
Similarly, the Failure to Prevent Fraud offence requires large funds to prove they are clearly committed to preventing fraud. ‘Large organisations’, by definition, which can also apply to funds, are those that meet at least two of having more than 250 employees, more than £36m in turnover, and more than £18m in total assets. This encompasses evidence of a governance framework, training and resources for employees, communication to workers on the company’s stance against fraud, risk assessments, prevention procedures, continuous due diligence, and other relevant measures.
While there is acknowledgement that compliance will be a burden, with 58% of directors surveyed by Vistra agreeing, and the Government scrapping further reforms for SME account filings in 2026, adherence won’t be easy.
Why should funds be concerned?
There are significant penalties for non-compliance. Failure to verify the identities of directors and PSCs can lead to unlimited fines for organisations. Directors and PSCs, along with the funds they act on, will also not be permitted to file documents, partake in acquisitions, and could even be disqualified from the register.
The Failure to Prevent Fraud offence also places criminal liability on organisations, increasing risks for fund managers whose portfolios are not able to prove commitment to fraud prevention.
The crackdown on fake directors (such as Jesus, Holy Christ) has already begun, with over 11,500 companies struck off the register. However, Companies House will have no qualms going after legitimate companies, too, should they not comply. There is little doubt they will be made into examples, as seen with the implementation of previous regulations, such as GDPR, that were initially not taken seriously. This can generate poor publicity for organisations and cause reputational damage.
What should fund managers do?
An initial audit can outline the areas that fund managers need to focus on to identify blind spots before regulators do, avoid future liability, and establish a culture of compliance.
Managers must ensure that documented procedures are in place to defend against the Failure to Prevent Fraud offence. This can be done by following UK guidance, with a particular focus on due diligence exercises for acquiring funds. To manage ID verification and ensure compliance with ECCTA, fund managers should: firstly, map their entity structure and identify all individuals who are required to complete verification. Secondly, complete a full review of all identification, PSC, and filing records to confirm they are up to date, and if not, identify any gaps. Finally, provide training to directors and secretaries to understand their duties.
Given the burden of compliance and potential issues that may arise from DIY verification, outsourcing the ECCTA process to ACSPs can make it easier to conduct risk assessments, spot gaps, and alleviate internal workloads particularly if individuals are based overseas.
ECCTA compliance will help simplify and modernise company structures, safeguard funds from fraud, build trust with regulators and enhance their reputation as an example of good corporate governance. It’s time for fund managers to act now, or risk non-compliance.
Sophie White, Associate Director – Funds at Vistra
