FCA Wholesale Buy-Side Priorities

What Firms Need to Do Now

The FCA’s new Regulatory Priorities framework replaces over 40 portfolio letters with a more targeted, outcomes-focused approach.

For these firms, the message is clear: The FCA expects firms to demonstrate strong governance, effective risk management, and clear delivery of market integrity and investor outcomes.

With a clear pipeline of regulatory change ahead, firms that act early will be best positioned to navigate scrutiny and strengthen their market position.

While the publication is principles-based, it has direct implications for firms operating under IFPR (including remuneration requirements), consumer duty, operational resilience and AIFMD frameworks.

What the FCA Will Do (Key Areas)

1. Growth, Innovation and Regulatory Reform

The FCA is actively reshaping the regulatory landscape to support growth and innovation.

What the FCA will do:

• Consult on a more proportionate AIFM regime;
• Digitise and simplify fund authorisation processes;
• Finalise tokenisation policy and support the Digital Securities Sandbox;
• Transform the regulatory data model; and
• Consult on streamlining TCFD reporting.

Implication:
Firms need to ensure governance frameworks can support new technologies (AI, DLT, tokenisation) and evolving regulatory requirements.

2. Consumer Outcomes and Product Governance

The FCA continues to push strongly on Consumer Duty and product design.

What the FCA will do:

• Continue multi-firm reviews of Model Portfolio Services (MPS);
• Focus on outlier firms where products risk consumer harm;
• Engage in retail private markets and retirement products;
• Finalise policy on client categorisation and conflicts of interest; and
• Consult on Consumer Duty application to wholesale firms.

Implication:
Wholesale firms should expect increasing scrutiny on:

• Product governance;
• Distribution chains; and
• Evidence of good outcomes.

3. Private Markets: Valuation and Conflicts

Private markets remain a major supervisory priority for the FCA.

What the FCA will do:

• Continue multi-firm reviews on valuations and conflicts of interest;
• Conduct supervisory work on private market risk management;
• Support the Bank of England’s system-wide stress scenario (SWES); and
• Contribute to global work on private credit and valuation standards.

Implication:
Firms should expect deep scrutiny on:

• Valuation methodologies;
• Governance and oversight;
• Stress testing processes and methodologies; and
• Conflicts in complex structures.

4. Market Integrity, Resilience and Financial Crime

The FCA is increasing its focus on systemic risks and operational resilience.

What the FCA will do:

• Identify outlier funds with high leverage or illiquidity;
• Finalise liquidity risk management rules;
• Enhance the UK transaction reporting regime;
• Conduct cyber and resilience testing (CBEST, STAR-FS);
• Use tools like CQUEST and ORQUES to assess resilience; and
• Continue supervisory focus on market abuse and financial crime/

Implication:
Firms will be expected to demonstrate:

• Robust surveillance and controls;
• Strong operational resilience frameworks; and
• Effective management of third-party dependencies.

5. IFPR and Remuneration: Regulatory Review Phase

The FCA has confirmed it will begin a post-implementation review of IFPR:

“To make sure it remains fit for purpose amid evolving market conditions…”

What the FCA will do:

• Assess how IFPR is working in practice;
• Consider future evolution of the regime; and
• Review the effectiveness of remuneration rules for solo-regulated firms.

Implication:
Firms should expect increased scrutiny on:

• How prudential frameworks operate in practice;
• Alignment between risk, capital and business strategy; and
• Whether remuneration supports appropriate behaviour and outcomes.

Other Areas of Focus

• ESG ratings: Finalise regulation of ESG rating providers (effective 2028).
• Financial crime: Publish findings from the 2025 financial crime survey.
• Crypto assets: Finalise the UK crypto asset regulatory regime.
• SMCR: Joint review with HMT and PRA to reduce regulatory burden.
• AI: Encourage experimentation via sandboxes; publish AI Live Testing evaluation.

 What’s Coming Next (Timeline Highlights)

The FCA has set out a clear pipeline of regulatory activity:

• Q2 2026
  • Tokenisation policy
  • TCFD reporting consultation
• Q3 2026
  • AIFMD consultation
  • Conflicts of interest review findings
  • Data collection for asset managers
• H2 2026
  • Transaction reporting reforms
• 2027+
  • IFPR post-implementation review
  • Further prudential and AIFM developments

Where Firms Are Being Challenged

The following is a non-exhaustive list of what we are seeing across the market:

• Governance frameworks lacking effective challenge;
• Weak valuation and conflicts oversight;
• Surveillance not aligned to business models;
• Fragmented data and reporting; and
• Underdeveloped stress testing capabilities.

How We Support Firms

We help buy-side firms move from awareness to execution.

Our focus is on ensuring frameworks stand up to real supervisory scrutiny:

• Regulatory impact assessments:
  Identify exposure to FCA priority areas
• Governance and conflicts reviews:
  Strengthen oversight and decision-making structures
• Valuation and AIFM support:
  Enhance processes and documentation
• Remuneration reviews:
  Drafting or review of remuneration policies and arrangements to ensure that incentives align with risk and conduct
• Surveillance and financial crime frameworks
  Test effectiveness and calibration
• Risk Management framework, Stress testing and resilience frameworks
  Developing or reviewing risk management frameworks and developing credible, forward-looking scenarios to ensure that these work in practice and that they take into consideration FCA requirements and expectations.