FCA publications put spotlight back on Corporate Finance Firms
The Financial Conduct Authority (FCA) has released two publications in October 2025 relevant to corporate finance firms. One examining anti-financial crime controls and the other outlining its findings from its multi-firm review that considered client categorisation processes.
Firms should treat these publications as the culmination of a multi-year supervisory focus and should expect follow-up requests, targeted engagement, and potential enforcement where weaknesses persist. Firms that have not already tested their anti-financial crime frameworks and client categorisation practices against the issues identified by the FCA should prioritise an internal review and remediation work where necessary.
Financial Crime controls
In February 2025, the FCA issued a survey to corporate finance firms, collecting information about their anti-money laundering (AML) controls and processes. The results of the survey summarised responses from several hundred firms and revealed widespread weaknesses in AML controls and oversight.
The FCA’s survey found that around two-thirds of responding corporate finance firms may be non-compliant with one or more elements of the Money Laundering Regulations.
Key risk areas identified included:
No documented firm-wide AML risk assessment: 11% of firms reported having none.
Missing customer due diligence (CDD) evidence: 10% did not retain documented CDD.
Inconsistent customer risk assessments: 27% did not use a standardised customer risk assessment (CRA) form.
The FCA also observed gaps in oversight of appointed representatives (ARs) and distribution chains, including firms that failed to conduct or monitor AR financial crime risk.
Client categorisation
The FCA announced its intention to examine client categorisation in September 2023 as part of a wider supervisory focus on the corporate finance sector.
Its supervisory programme has since evolved, and its multi-firm review identified repeated weaknesses in how firms apply COBS 3 and COBS 4, particularly in the categorisation of corporate finance contacts and potential ‘opted up’ professional clients.
Common failings included:
Lack of structured or documented assessments: categorisation decisions were often superficial or treated as a tick-box exercise.
Over-reliance on self-certification: firms accepted client self-certifications without meaningful verification.
High-level policies lacking operational detail: procedures did not explain how retail clients are opted up to elective professional status or how safeguards are applied.
Corporate finance contact categorisation gaps: no maintained list of contacts, missing or outdated assessment evidence, and unclear communications regarding the firm’s role.
Confusion between FCA rules and Financial Promotion Order (FPO) exemptions: firms often failed to distinguish reliance on FCA categorisation rules from reliance on FPO exemptions.
These shortcomings risk the inappropriate removal of client protections and expose firms to regulatory scrutiny and potential enforcement action.
Immediate priorities for corporate finance firms
To address the FCA’s findings, firms should prioritise the following actions:
Complete a documented, firm-wide AML risk assessment mapping products, clients and distribution channels.
Conduct a comprehensive CDD file review to locate, evidence, and retain missing due diligence documentation.
Establish a consistent approach to client risk assessment and categorisation through a standardised form that ensures regulatory compliance, verification procedures, and a defined escalation framework..
Enhance oversight of appointed representatives and corporate finance contacts through formal onboarding checks, periodic reassessments, and monitoring samples.
Update policies and procedures to provide clear step-by-step guidance when opting up retail clients to elective professional status, evidence requirements, and senior management reporting.
Prepare governance evidence - including board reports, remediation trackers, and board/committee packs - to demonstrate timely and effective remediation.
How Ocorian can help corporate finance firms
Based on our experience working with corporate finance firms and regulators, we expect the FCA to follow up these reviews with targeted supervisory engagement.
Our expertise in regulatory compliance, combined with deep industry and in-house experience, means we understand the challenges corporate finance firms face in meeting FCA expectations.
We can support firms to ensure they meet the FCA requirements in respect of AML , client categorisation and ongoing monitoring.
Get in touch if you need support.