FCA Wholesale Buy-Side Regulatory Priorities 2026: Compliance Guide for Asset Managers & Alternative Investment Firms

The Financial Conduct Authority (FCA) has published its 2026 Regulatory Priorities for Wholesale Buy-Side firms, setting out the regulator’s supervisory focus for asset managers, alternative investment firms, custody providers and fund service providers operating in the UK.

The report replaces the FCA’s traditional portfolio letters and is intended to give firms a clearer, more consolidated overview of supervisory expectations. Boards and senior management teams are expected to review the priorities carefully and consider whether their governance, risk management and FCA compliance framework remain appropriate.

For firms involved in investment management and wholesale financial services, the document provides a useful roadmap for regulatory engagement over the coming year and highlights where supervisory scrutiny is likely to increase. Many firms are already using compliance consulting services and regulatory health checks to assess whether their existing compliance frameworks align with the FCA’s evolving expectations.

The Strategic Importance of the Buy-Side Sector

The FCA highlights the significant role the UK buy-side sector plays in both the domestic and global financial system. The UK remains the largest asset management centre in Europe and the second largest globally, with the sector acting as a key channel for allocating capital to businesses, infrastructure and long-term investment opportunities.

Despite continued growth in assets under management, firms are facing a range of pressures that are reshaping business models across the industry. These include fee compression, rising operational costs and increasing competition from large global investment managers.

At the same time, technological developments and structural changes in markets are driving significant transformation across the sector. Firms are increasingly exploring innovations such as:

• Artificial intelligence (AI)

• Distributed ledger technology (DLT)

• Tokenisation of funds and assets

• Digital investment platforms and automated investment solutions

These innovations offer potential efficiency and investor benefits, but they also introduce new regulatory, operational and governance risks that firms must carefully manage.

As a result, many firms are reviewing their regulatory compliance frameworks, compliance monitoring programmes and corporate compliance risk assessments to ensure they remain aligned with supervisory expectations.

Against this backdrop, the FCA has identified four key regulatory priorities for the wholesale buy-side sector in 2026.

Key Priority One: Evolving Regulation to Support Growth and Innovation

One of the FCA’s central objectives is to ensure that the UK remains a globally competitive investment hub, while maintaining appropriate regulatory standards.

To support this goal, the regulator plans to modernise elements of the regulatory framework governing asset managers and alternative investment firms. This includes work to make the regulatory regime more proportionate and better aligned with developments in financial markets.

Key initiatives expected during the year include:

• Consultation on a new regulatory framework for Alternative Investment Fund Managers (AIFMs)

• Improvements to the regulatory data model for asset managers and funds

• Further policy work on fund tokenisation and digital asset infrastructure

• Digitisation of the fund authorisation process

• Ongoing use of the Digital Securities Sandbox and FCA regulatory sandbox to support innovation in financial markets

The FCA is also encouraging firms to experiment with emerging technologies in controlled environments such as regulatory sandboxes. These initiatives allow firms to test new financial technologies while ensuring risks remain manageable.

For firms, this priority reinforces the importance of ensuring governance frameworks evolve alongside technological developments. Firms adopting AI, automated investment strategies or tokenised structures should ensure their compliance monitoring framework and risk management arrangements adequately address the risks associated with new technologies.

Key Priority Two: Delivering Good Outcomes for Consumers

Consumer protection remains a central regulatory focus. The FCA continues to emphasise the importance of embedding the Consumer Duty and adopting an outcomes-based approach to regulation.

Although much of the buy-side sector operates in wholesale markets, many firms are still involved in the design, manufacture or distribution of products that ultimately reach retail investors. As a result, the Consumer Duty remains relevant across much of the industry.

The FCA expects firms to:

• Ensure products and services are designed with consumer outcomes in mind

• Provide clear and transparent communications to investors

• Maintain effective oversight of distribution arrangements

• Monitor whether investors are receiving appropriate value from investment products

A key supervisory initiative for the coming year is the FCA’s multi-firm review of Model Portfolio Services (MPS). This review will assess whether investors using MPS arrangements are receiving suitable investment solutions and fair value.

The FCA has also identified instances where firms offering high-risk investments did not have appropriate processes for assessing investor suitability or understanding how the Consumer Duty applied to their business models.

In response, firms should review how the Consumer Duty is embedded within their governance and compliance frameworks. This may include reviewing:

• Their compliance monitoring plan

• Product governance arrangements

• Investor communication frameworks

• Distribution oversight procedures

Many firms seek support from compliance consultants in the UK to carry out compliance gap analysis or regulatory health checks when embedding Consumer Duty requirements across their operations.

Key Priority Three: Strengthening Standards in Private Markets

Private markets have experienced significant growth in recent years and now represent an increasingly important component of both institutional and retail investment portfolios.

The FCA recognises the economic benefits of private market investment but also highlights potential risks associated with valuation transparency, liquidity management and conflicts of interest.

The regulator is therefore prioritising supervisory work focused on governance and operational practices in private markets. Key areas of focus include:

• The valuation of private assets

• Identification and management of conflicts of interest

• Risk management within private market investment strategies

• Governance of product structures that combine public and private assets

In particular, the FCA is concerned that as firms seek to expand access to private markets, some may design products that prioritise distribution convenience over the underlying liquidity characteristics of the assets.

Where firms seek to provide retail access to private market investments, the FCA expects product structures and governance frameworks to reflect the inherent illiquidity and complexity of those investments.

Firms operating in this area should ensure their compliance risk assessment processes and product governance frameworks appropriately address the additional risks associated with private market investments.

Key Priority Four: Preserving Market Integrity and Operational Resilience

The final major priority focuses on market integrity and operational resilience.

Buy-side firms play an important role in financial markets through their trading activities and investment strategies. Disruption affecting these firms can therefore have broader consequences for market stability and investor confidence.

The FCA highlights several key risks that firms must manage carefully, including:

• Operational disruption and cyber threats

• Dependence on third-party service providers

• Concentrated or highly leveraged investment strategies

• Failures in systems designed to detect market abuse

Operational resilience continues to be a significant regulatory focus, particularly given the sector’s reliance on outsourcing and third-party providers. Firms are expected to have robust arrangements for identifying dependencies, managing incidents and maintaining critical business services during periods of disruption.

Many firms are therefore reviewing their compliance monitoring frameworks, operational resilience plans and risk management controls to ensure they meet the FCA’s expectations.

Additional Areas of Regulatory Focus

Alongside its core priorities, the FCA will also progress a number of broader regulatory initiatives affecting the buy-side sector.

These include:

• A post-implementation review of the Investment Firms Prudential Regime (IFPR)

• A review of remuneration rules for solo-regulated investment firms

• Development of a regulatory regime for ESG ratings providers

• Continued implementation of the UK’s cryptoasset regulatory framework

The FCA will also publish findings from its financial crime survey of asset managers and alternative investment firms later in the year.

These developments highlight the importance of maintaining a robust regulatory compliance framework and ongoing compliance support arrangements.

What Asset Managers and Alternative Investment Firms Should Do Now

The FCA’s regulatory priorities highlight the importance of maintaining strong governance and risk management frameworks across the buy-side sector.

Senior management teams should consider whether their firm’s compliance and risk management arrangements adequately address the areas highlighted by the regulator.

Practical steps firms may wish to consider include:

• Reviewing governance arrangements for emerging technologies

• Assessing whether Consumer Duty considerations are fully embedded within product governance processes

• Evaluating conflicts of interest and valuation practices in private market investments

• Testing operational resilience and third-party dependency management

• Reviewing their compliance monitoring plan and business-wide compliance risk assessment

How Compliance Angle Can Help

The FCA’s 2026 regulatory priorities reflect a regulatory environment that is evolving alongside significant changes in financial markets. Innovation, technological development and the growth of private markets are creating new opportunities for firms, but also introducing new risks.

For buy-side firms operating in the UK, the message from the regulator is clear: firms must continue to strengthen governance, risk management and investor protection while adapting to these structural changes.

Firms that take a proactive approach to reviewing their FCA compliance framework, compliance monitoring programme and risk management arrangements will be better positioned to navigate the evolving regulatory landscape.

At Compliance Angle, we support asset managers, investment firms and financial services businesses with practical, commercially focused compliance support tailored to FCA expectations. Our services include:

• FCA authorisation support and assistance with FCA applications

• Designing and implementing compliance monitoring frameworks and compliance monitoring plans

• Conducting compliance gap analysis and regulatory health checks

• Developing and reviewing business-wide risk assessments and compliance risk assessments

• Ongoing compliance advisory and outsourced compliance support

• Assistance with Consumer Duty implementation and governance reviews

Our goal is to help firms build robust compliance frameworks that not only meet regulatory requirements but also support sustainable business growth in an increasingly complex regulatory environment.