UK FCA portfolio letter on supervision priorities for asset management and alternatives portfolios

The UK Financial Conduct Authority (FCA) has published a portfolio letter explaining its current supervision priorities for asset management and alternatives. Firms must discuss this letter with their Board, Executive Committee and accountable Senior Managers to consider whether the risks of harm discussed exist in their firm and implement strategies for managing them.

The FCA's supervisory priorities include:

• Supporting confident investing in private assets. The FCA will shortly be releasing its multi-firm review on private market valuation practices. The FCA will also start a multi-firm review on conflicts of interest at firms managing private assets.
• Market integrity and avoiding disruption. Informed by the vulnerabilities identified in the System Wide Explanatory Scenario, the FCA will focus surveillance on prudent risk management, liquidity management and operational resilience.
• Consumer outcomes. The FCA will publish its findings from the ongoing multi-firm review of unit linked funds later this year and will also start a multi-firm review of model portfolio services (MPS). This review of MPS will look at how firms are applying the Consumer Duty, to provide confidence that investors are receiving good outcomes from MPS.
• Sustainable finance. The FCA will engage with firms with sustainability-related products, to understand how they are implementing the labelling, naming, and marketing rules.
• Financial crime and market abuse. Firms are expected to ensure that their market abuse controls enable them to discharge obligations under the Market Abuse Regulation.

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