FCA Dear CEO Letter: Asset Management and Alternatives Supervisory Strategy for 2025

The UK Financial Conduct Authority (FCA) published its Dear CEO letter to the asset management and alternatives sector on 26 February 2025 to inform the industry about its supervisory priorities for 2025.

The FCA revisits its supervisory strategy for the firms it supervises every two years, and although there was an interim update letter published in March 2024, the most recent letter fulfills the regulator’s promise to keep firms abreast of their priorities.

In the letter, the FCA states it will be focusing on enabling growth and streamlining its regulatory and data frameworks by:

• Reforming the regulatory framework through an industry review of AIFMD.
• Ensuring confident investing in private markets through the results of its soon to be published Private Market Valuation Practices review in addition to an upcoming multi-firm review on conflicts of interest.
• Reducing market disruption through focused surveillance on prudent risk management, liquidity management, and operational resilience following the FCA’s and Bank of England’s System Wide Exploratory Scenario (SWES) report.
• Securing good outcomes for retail consumers of private market products through a multi-firm review of model portfolio services (MPS) looking at how firms are applying the Consumer Duty and publishing its review of unit-linked funds later this year.
• Engaging with firms that have sustainability-related products to maintain and grow sustainable finance and understand how the labelling, naming, and marketing rules are implemented in these firms.
• Stressing the importance of effective financial crime systems and controls, with a focus on AML controls in private markets funds and a strong market abuse framework.

Our guidance

This letter is relevant to all firms in the alternative asset management space, and of particular interest to private market strategies.

Firms are expected to discuss this letter with their board, executive committee, and accountable senior managers to consider whether the risk of harm discussed exists within their firm and, if so, implement strategies for managing them.

How we help

We can help you to navigate the evolving regulatory landscape while considering the complexity of your firm’s unique compliance requirements. 

We help our clients with their regulatory programme through a combination of compliance advisory, innovative technology, and managed services. Our services and solutions include standard and customized compliance packages that address a variety of compliance needs, including UK asset management regulation, cybersecurity, ESG, and training solutions for financial firms.

Reach out to your ACA consultant, or contact us to find out how we can help transform your firm’s compliance program. 

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