FCA Flags Risks in Wealth Management Consolidation: Firms Must Act Now

The FCA’s recent multi-firm review sends a clear warning: consolidation in UK financial advice and wealth management is amplifying conduct and financial risks. As firms scale, vulnerabilities emerge—particularly around debt, complex group structures, client conflicts, and governance.

The regulator expects firms to benchmark their governance and risk frameworks immediately, with intensified supervisory scrutiny from 2026 onwards. Consolidators and firms—especially those at the outset of a transaction—must act decisively: test resilience, strengthen controls, and close compliance gaps. Delay may jeopardize approval of your change of control.

If your firm is navigating change of control, assessing governance robustness, or preparing for regulatory engagement, Fractyl Consulting offers deep expertise in regulatory due diligence, risk assessment, and integration compliance—ensuring your transaction is built on solid ground.

Here's what affected firms should be thinking about :

For Regulated Firms

• Effective governance and compliance must keep pace with business growth, especially in the context of mergers and acquisitions.

  
  

• Due diligence around acquisitions needs to move beyond the basics, to embrace financial resilience, permissions, suitability, and potential impacts for clients and staff.

  
  

• Securing FCA approval and engaging proactively with regulators are now critical; attempted acquisitions without the proper processes risk severe consequences.

  
  

• Strategic financial sustainability, supported by credible debt and capital plans should underpin acquisition strategies.

  
  

• Delivering consistently good outcomes must remain at the core of decision-making, with Consumer Duty principles embedded throughout.

  
  

• Post-acquisition integration must protect client experience and ensure standards of advice are never compromised.

For Consolidators and Private Equity Owners

• The FCA expects consolidators to implement advanced governance, risk management, and financial controls, moving away from a simple growth-at-any-cost model.

  
  

• Leveraged acquisitions and aggressive cash extraction strategies will be under close scrutiny, disciplined capital management is expected.

  
  

• Rapid expansion requires a robust framework for oversight, risk management, and operational integration.

  
  

• Adviser incentives and strategy must align with client interests; managing conflicts of interest is no longer optional.

  
  

• Prepare for in-depth, data-driven regulatory engagement and potential conditions or delays until governance and financial standards are fully met.

  
  

• Accountability for client outcomes must be demonstrably embedded throughout product and service delivery.

Please contact us for a confidential discussion at www.fractylconsulting.com