Corporate Finance Compliance Functions: What the FCA's Survey Found
The Financial Conduct Authority (FCA) has found that most corporate finance firms carry out core compliance activities, but many lack the independence, presence and day-to-day practices that allow compliance to challenge the business. In a blog published on 8 October 2026, the FCA reported that 63% of surveyed firms have a compliance function with other business responsibilities, 90% use third-party compliance support, and 140 firms do not include regulatory compliance in staff performance assessments.
The findings come from a survey announced in the FCA's Regulatory Priorities: Wholesale Markets report, in which the FCA said it would assess corporate finance firms' compliance functions and their ability to challenge the business effectively. The blog does not introduce new rules, but it sets out clear supervisory expectations, and the FCA has confirmed it will engage further with selected firms. For any corporate finance firm, this is a timely prompt to test whether its compliance function works in practice as well as on paper.
What Did the FCA's Survey of Corporate Finance Firms Find?
The FCA surveyed 411 corporate finance firms about their compliance resources and activities and received 382 responses. Most respondents were small: 64% had nine or fewer employees and 89% had fewer than 50. The FCA acknowledged that there is no single blueprint for effective compliance and that firms operate a range of different practices.
Its overarching message is that compliance cannot be treated as a series of tasks. It is a culture that senior managers must embed throughout the business. It is worth being clear about the status of what follows. These are FCA findings and supervisory expectations, not new rules or formal guidance. The blog does not cite Handbook provisions, but the underlying requirements for a compliance function sit in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC), in particular SYSC 6.1.
Dual-Hatted Compliance and the Risk of Conflicts
The most significant structural finding is that 63% of firms have a compliance function that is not dedicated solely to compliance and also has other business responsibilities. The FCA notes that this can create conflicts of interest, for example where the compliance function also plays a role in revenue generation.
The FCA accepts that arrangements will differ according to the nature, scale and complexity of the business and should be proportionate to the risks involved. It adds an important qualification: arrangements are only proportionate if they allow good outcomes, meaning high standards of conduct and effective conflicts management, to be delivered. In small firms, where decision-making may sit with a small number of people, the FCA considers it particularly important that compliance has enough presence, authority and access to exert influence and provide meaningful challenge.
In our view, the blog does not say that a combined role is unacceptable. The practical question is whether the firm has identified the conflict, put mitigants in place and can show that challenge actually happens, for example through minuted escalations or decisions that were changed following compliance input.
Higher Expectations for Firms With Public Markets Roles
The FCA states that the second line of defence must scale as a firm grows or as its activities take on greater impact. Of the firms surveyed, 32 act as AIM nominated advisers, AQSE corporate advisers or brokers, or listing sponsors. For firms in these roles, the FCA describes strong and credible challenge as essential to maintaining market integrity and investor confidence.
Firms with these roles, or firms that are growing into them, should expect their compliance arrangements to be judged against the market they serve rather than their headcount alone.
Oversight of Third-Party Compliance Support
Almost all respondents, 90%, use some form of third-party compliance support. The FCA recognises that external expertise can be valuable, especially for smaller firms. It is equally clear that responsibility for regulatory compliance remains with the relevant senior management function holder.
The FCA expects firms to stay actively involved, understand the advice they receive and maintain effective oversight of any third-party support. In practice, that means a defined scope of work, regular reporting from the provider, senior managers who understand and act on that reporting, and a record of how advice has been considered. Our earlier article on when firms should seek external compliance expertise covers how to structure this.
Gaps in the Practices That Build a Compliance Culture
Most firms reported carrying out the key activities the FCA expects, and 47% carried out all the activities covered by the survey. Seven firms reported carrying out none of them. Some gaps were in basic infrastructure: 32 firms had no compliance manual, 49 did not provide compliance-related training and 67 had no compliance monitoring programme.
The wider gaps were in the practices the FCA describes as bringing compliance culture to life. The number of firms that reported not carrying out each practice was as follows:
regulatory compliance forms part of staff performance assessment: 140 firms
arrangements for whistleblowers to disclose concerns: 90 firms
a breach register: 82 firms
compliance attends management body meetings: 82 firms
compliance reports at least annually to the management body: 82 firms
compliance monitors the complaints handling process: 74 firms
The FCA stresses that these practices are not simply administrative. They help firms identify emerging risks, target training, strengthen conduct, systems and controls, and respond before problems become more serious. A firm without a breach register, for example, has little basis for spotting recurring weaknesses or demonstrating how it decided whether a matter was reportable.
Key Themes for Corporate Finance Firms
Taken together, the findings carry three broader messages that apply beyond the specific survey questions:
Proportionality is measured by outcomes. A lean compliance function is acceptable only if it still delivers effective challenge and conflicts management.
Compliance culture is a senior management responsibility. The practices the FCA highlights, such as management reporting and performance assessment, depend on leadership rather than on the compliance function alone.
Outsourcing does not transfer accountability. Firms can buy expertise, but not oversight.
What Should Firms Do Now?
The FCA has asked firms to use these findings to reflect on their arrangements and identify where improvement is needed. It sets out five questions for firms to consider:
Does compliance have enough presence, authority and access to influence and challenge the business?
Is compliance involved early enough in important business decisions?
Do senior managers receive timely and clear information about compliance risks and breaches?
Can staff raise concerns safely, and are those concerns properly escalated and investigated?
Does the firm maintain active oversight of third-party compliance support?
For most firms, a focused review will be more useful than a wholesale redesign. We suggest firms take the following proportionate steps:
benchmark current arrangements against each activity in the FCA's survey table and record any gaps with a clear rationale where an activity is judged unnecessary
where compliance is combined with other roles, document the conflicts this creates and the mitigants, and consider whether the SYSC proportionality position is sound
introduce or refresh a breach register and an annual compliance report to the management body, supported by regular compliance monitoring
check that whistleblowing arrangements exist, are known to staff and route concerns to someone independent of the matter
consider how regulatory compliance can feature in performance assessments, which can sit alongside existing SM&CR conduct and fitness assessments
for outsourced support, confirm the scope, reporting lines and the senior manager responsible for oversight
record the review and its conclusions, so the firm can explain its position if contacted by the FCA
Firms with public markets roles, or those planning to take one on, should give particular attention to whether their compliance resource has kept pace with their activities.
Frequently Asked Questions
What did the FCA's survey of corporate finance compliance functions find?
The FCA surveyed 411 corporate finance firms and received 382 responses. It found that most firms carry out core compliance activities, but 63% have a compliance function with other business responsibilities, 90% use third-party compliance support, and many lack breach registers, whistleblowing arrangements and regular reporting to management.
Does the FCA require corporate finance firms to have a dedicated compliance officer?
The FCA's blog does not require a dedicated compliance officer and says there is no single blueprint for effective compliance. Arrangements should be proportionate to the nature, scale and complexity of the business, but the FCA warns that combined roles can create conflicts of interest and that arrangements are only proportionate if they deliver good outcomes.
Can a corporate finance firm use outsourced compliance support?
Yes. The FCA found that 90% of surveyed firms use some form of third-party compliance support and recognises its value, especially for smaller firms. Responsibility for regulatory compliance remains with the relevant senior management function holder, who must stay involved, understand the advice and maintain effective oversight.
Is the FCA introducing new rules for corporate finance compliance functions?
No. The blog published on 8 October 2026 sets out survey findings and supervisory expectations rather than new rules. The FCA has said it will engage further with selected firms to understand the adequacy and effectiveness of their compliance resources, but it has not published a timetable.
Which corporate finance firms should pay most attention to the findings?
Small firms where decision-making rests with a few people, firms where compliance staff also have revenue-generating roles, and firms acting as AIM nominated advisers, AQSE corporate advisers or brokers, or listing sponsors should pay particular attention. The FCA expects challenge to be strong and credible where a firm has an important public markets role.
How Compliance Angle Can Help
Compliance Angle supports FCA-regulated firms, including corporate finance firms, in reviewing and strengthening their compliance arrangements. Our support is practical and proportionate to each firm's business model, permissions, size and regulatory risk. Relevant services include:
compliance health checks and gap analyses against the FCA's survey findings
compliance frameworks and policies, including compliance manuals, breach registers and whistleblowing procedures
compliance monitoring programmes and compliance reporting to the management body
SM&CR support, including responsibilities mapping and performance assessment
risk management and governance support, including conflicts of interest arrangements
compliance training for staff and senior managers
ongoing compliance support, structured so that senior managers remain informed and in control
If you would like to discuss how the FCA's findings apply to your firm, please contact us or email info@complianceangle.co.uk.
Source: Financial Conduct Authority, "Strong compliance functions support trusted corporate finance markets", blog by Jamie Whitehorn, published 8 October 2026
