The FCA has published its first Regulatory Priorities report for the wholesale buy side, replacing more than 40 individual portfolio letters with a single, annual statement of expectations. The message to boards and senior management is deliberately direct: firms should read the report carefully, assess the priorities against their business model, and act where necessary.
While the FCA positions itself as a “smarter regulator” – predictable, proportionate and supportive of growth – it is equally clear that firms unable to evidence effective governance, operational resilience and decision‑making will face earlier and more decisive intervention.
Four priorities, one underlying theme: evidence
The wholesale buy‑side report sets out four headline priorities for asset managers, alternative investment managers, and custody and fund services providers:
- Evolving regulation to support growth and innovation
- Delivering good outcomes, where firms have retail or downstream investor exposure
- Reinforcing high standards across private markets
- Preserving market integrity and operational resilience
Taken together, these priorities reflect a supervisory shift away from policy interpretation and towards demonstrable outcomes. The FCA is less interested in whether a framework exists on paper, and more focused on whether it works in practice – particularly under stress.
Operational resilience moves from compliance to supervision
Operational resilience sits at the centre of the FCA’s wholesale priorities, with explicit emphasis on third‑party risk, technology dependency and firms’ ability to continue delivering critical services during disruption.
For many wholesale firms, this marks a move from resilience as a compliance exercise to resilience as an ongoing supervisory test. The FCA has signalled that it will challenge not just resilience mapping, but how effectively firms oversee outsourced activities, manage data quality, and test their response to incidents.
This is particularly relevant for buy‑side firms operating complex operating models or relying heavily on delegated service providers. Weak oversight of third parties, undocumented decision‑making, or limited assurance over execution are now explicit regulatory risks.
Innovation is welcome – but only with clear accountability
The report is notably constructive on innovation. The FCA reiterates its support for AI, tokenisation and distributed ledger technology, including through regulatory sandboxes and industry pilots.
However, the regulator emphasises that technology adoption should not dilute accountability. Firms will be expected to demonstrate:
- Clear ownership and governance of new technologies
- Robust testing and challenge before deployment
- Ongoing oversight once solutions are live
- Evidence that risks are identified, monitored and mitigated
In practice, this means firms need to show how decisions are made, how controls operate day‑to‑day, and how outcomes are monitored – not simply that a tool or policy exists.
Private markets and valuation under sustained scrutiny
The FCA also reinforces its focus on private markets, including valuation practices, conflicts of interest and investor transparency. For firms operating in private or less liquid assets, supervisory attention is increasingly directed at how valuation judgements are governed, challenged and recorded.
Boards should expect scrutiny of how valuations are reviewed, how conflicts are managed in practice, and whether disclosures genuinely support informed investor decision‑making.
Key takeaways for boards and executives
- Regulatory “tone” matters less than evidence of execution
- Operational resilience is no longer theoretical – it must be tested and provable
- Innovation is encouraged, but only with strong governance and oversight
- Private market controls, especially valuation, remain a priority risk area
Key actions firms should take now
- Review resilience evidence, not just frameworks – particularly for third‑party oversight
- Stress‑test governance arrangements, including delegation and escalation routes
- Assess technology controls, focusing on accountability and monitoring post‑implementation
- Challenge valuation and conflicts processes, ensuring decisions are documented and defensible
- Prepare for supervisory engagement, with clear, accessible evidence of how outcomes are achieved
For wholesale buy‑side firms, the direction is measured but unmistakable. The FCA is aligning its pro‑growth ambitions with sharper supervision, based on what firms can actually demonstrate.
Firms that invest now in governance, oversight and evidence generation will be better positioned not only for scrutiny, but for sustainable growth under the FCA’s evolving supervisory model.
TCC works with firms to embed operational resilience, accountable oversight and evidence‑led governance aligned to FCA supervisory expectations.
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