The Financial Conduct Authority wants to give firms “more freedom to act” but is working to understand the opportunities and risks of increased investor access to private markets.
In a speech on Tuesday (November 25), FCA chair Ashley Alder, said this will partly be helped by the advice guidance boundary review.
He called this a “once-in-a-generation opportunity to help consumers better navigate their financial lives and plan for the long term”.
Alder said the FCA is also looking at the “mega trend” of private markets.
“As firms broaden the asset classes they invest in, or broaden the client base they are targeting, you can also expect us to take an interest,” he said.
“To support industry and investor confidence we are working to understand the associated opportunities and risks.
“When it comes to private assets, we are concentrating on valuation practices, conflicts of interest management and risk management.”
Alder said risk management is “crucial” with traditional asset managers adding private markets to their offerings and specialist firms expanding to serve new clients.
“It is important for all firms to recognise and manage the distinctive risks associated with new areas of business and understand the needs of new clients,” said Alder.
He also warned that conflicts of interest can arise when firms are operating across intersecting business lines or partner with other financial institutions.
This is an area the FCA launched a multi-firm review into in February.
The speech was delivered at the Investment Association’s annual conference which was held in Scotland.
tara.o’connor@ft.com
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