The FCA is raising the bar for wholesale buy-side firms; not by rewriting the rulebook, but by sharpening how it supervises against it.
Its first Regulatory Priorities report for the wholesale buy-side replaces the traditional portfolio letter with a more explicit and structured articulation of supervisory focus. More importantly, it signals a shift in how credibility will be assessed: less emphasis on whether frameworks exist on paper, and greater scrutiny of whether they operate effectively in practice.
Across governance, innovation, consumer outcomes, and market resilience, the message is consistent. Firms will increasingly be judged on evidence, accountability, and outcomes, not intent. For boards and senior management, the report provides a clear indication of where supervisory challenge, information requests, and engagement will concentrate over the coming year.
Four Priorities Shaping Buy-Side Supervision
Against a backdrop of market volatility, evolving investor expectations, and growing operational complexity, the FCA has set out four priorities that will guide its supervision of wholesale buy-side firms. These priorities are not thematic statements; they will be actively used to shape supervisory engagement throughout 2026.
1. Evolving Regulation: Innovation with Accountability
What the FCA is Trying to Achieve
The FCA continues to position the UK as a globally competitive investment hub, encouraging innovation, digitisation, and growth. But innovation is no longer viewed as neutral or optional; it is something firms are expected to govern, control, and evidence effectively.
What’s Changing in Supervision
The regulator is modernising its regulatory framework to accommodate emerging technologies such as AI, distributed ledger technology, and tokenisation, while streamlining certain reporting and authorisation processes. Initiatives such as the Digital Securities Sandbox, fund tokenisation proposals, and reforms to data models are intended to reduce friction and support responsible innovation.
However, supervisory tolerance is low where innovation outpaces governance. The FCA has been clear that new technologies must be accompanied by clear accountability, robust risk management, and effective oversight.
What This Means for Firms in 2026
For firms, these developments should not be viewed solely as regulatory simplification exercises. Faster authorisation processes, reduced reporting duplication, and sandbox participation also reduce tolerance for weak governance, unclear ownership, or immature controls.
The FCA expects firms to be able to demonstrate:
- Robust governance frameworks for emerging technologies, including AI and Distributed Ledger Technology (DLT)
- Clear lines of accountability for development, deployment, and oversight
- Effective risk management to prevent unmanaged conduct and operational or market risks
Innovation is increasingly a supervisory expectation rather than a differentiator. Firms that invest early in governance, data, and accountability frameworks will be better positioned as scrutiny intensifies.
2. Delivering Better Outcomes to Consumers
What the FCA is Trying to Achieve
The FCA continues to focus on building a healthy investment culture, improving access to appropriate products, and ensuring risks are communicated clearly. While the Consumer Duty primarily applies to retail consumers, its influence is increasingly being felt across wholesale business models.
What’s Changing in Supervision
Supervisory focus is moving beyond whether firms have implemented Consumer Duty requirements to whether those requirements are genuinely shaping decisions in practice, particularly in product design, distribution chains, and oversight of third parties.
The FCA has highlighted concerns around:
- Firms offering high-risk investments without adequate investor assessment
- Complex distribution structures where accountability is unclear
- Inconsistent application of sustainability disclosures and labels
Enhanced client categorisation reforms and continued supervisory work on Model Portfolio Services, Appointed Representatives, and sustainable investment claims reinforce this trajectory.
What This Means for Firms in 2026
Wholesale firms, particularly those with indirect retail exposure, overseas clients, or complex distribution arrangements, should not assume Consumer Duty considerations stop at the retail perimeter.
The FCA expects firms to:
- Assess whether and how the Duty applies across their business model
- Apply a consumer lens to product design, suitability, and value assessments
- Identify and address risks of consumer harm through targeted gap analysis
- Strengthen oversight of Appointed Representatives and distribution partners
Supervisors are increasingly testing how firms evidence outcomes, not just policies. Failure to do so risks supervisory challenge, enforcement action, and reputational harm.
3. Reinforcing Consistent, High Standards in Private Markets
What the FCA is Trying to Achieve
Private markets continue to grow in scale and importance, but the FCA has identified wide variability in standards particularly around valuation practices, conflicts management, and governance.
What’s Changing in Supervision
Recent supervisory work has highlighted that while some firms operate institutional-grade controls, others rely on informal processes, weak challenge, or overly commercial judgement. This variability raises risks of mis-valuation, unfair investor outcomes, and erosion of market confidence.
The FCA is also increasingly concerned about private assets being used in products offered to retail investors, bringing private markets squarely into the scope of Consumer Duty expectations.
What This Means for Firms in 2026
Private market practices can no longer be insulated from retail regulatory standards where end investor outcomes may be affected.
The FCA expects firms to:
- Review and strengthen valuation governance and challenge processes
- Ensure robust identification and management of conflicts of interest
- Align product development and distribution frameworks with Duty expectations
- Prepare for increased data collection and supervisory scrutiny
Systemic risks, particularly valuation and conflicts, remain priority areas. Firms should expect continued engagement and challenge as the FCA seeks to reinforce consistent standards across the sector.
4. Preserving Market Integrity and Resilience to Disruption
What the FCA is Trying to Achieve
Operational resilience and market integrity have been elevated to core supervisory priorities as complexity, outsourcing, and technology dependence increase.
What’s Changing in Supervision
The FCA has observed weaknesses in incident preparedness, third-party oversight, and market abuse controls, particularly where firms rely heavily on external providers such as administrators, custodians, and technology vendors.
Supervisory work will increasingly test resilience in practice, using data-led reviews, thematic work, and intelligence-led testing. Reforms to operational incident reporting, third-party oversight, and transaction reporting reinforce this focus.
What This Means for Firms in 2026
Operational resilience is no longer viewed as a back-office concern. It is a core governance and risk issue, closely linked to senior management accountability.
The FCA expects firms to:
- Embed operational resilience into product design and change management
- Maintain robust incident response and recovery arrangements
- Actively manage dependencies on material third-party providers
- Strengthen governance over leverage, concentration, and technology risk
- Maintain effective market abuse surveillance and controls
Weaknesses in these areas may attract scrutiny not only of firm arrangements but also of senior manager accountability under SM&CR.
Next Steps for Firms
Boards and senior management should expect the FCA to test whether this report has been actively considered, debated, and translated into action, not simply noted.
As part of the new Regulatory Priorities framework, ACA understands that firms are required to confirm to the FCA via RegData (its regulatory reporting system) within 30 days of report publication that the report has been reviewed at an appropriate governance forum and that any necessary actions will be taken.
Firms are encouraged to log in to RegData to review the filing. This is not intended to be a procedural exercise; supervisors have been clear that they expect firms to be able to evidence meaningful consideration and challenge.
In practice, this means firms should:
- Review the wholesale buy-side priorities at the board or senior management level
- Assess how each priority applies to their specific business model and risk profile
- Identify any gaps between current arrangements and supervisory expectations
- Agree on clear ownership, actions, and timelines where remediation or enhancement is required
The filing requirement reinforces the FCA’s broader supervisory message: outcomes-based supervision starts with senior accountability. Firms that treat this as a tick-box exercise risk follow-up challenge, while those that use it as an opportunity to test the effectiveness of governance and controls will be better positioned as supervisory engagement intensifies through 2026.
What Senior Management Should Take from This
Taken together, the FCA’s wholesale buy-side priorities reflect a clear supervisory shift. Credibility will increasingly be judged by evidence, not intent. Governance frameworks must operate effectively under stress. Innovation must be accompanied by oversight, and investor outcomes must remain central as business models evolve.
For boards and senior management, this is not about wholesale regulatory change; it’s a warning about heightened expectations around accountability, resilience and transparency.
Firms that engage early, align governance to supervisory priorities, and invest in demonstrable controls will be better positioned as the FCA’s outcomes-based supervision of the buy-side continues to mature, particularly where they draw on specialist expertise to test and strengthen their approach.
Operationalise Outcomes-Based Supervision
ACA helps buy-side firms translate evolving FCA supervisory expectations into practical, defensible action.
Our support focuses on ensuring firms can evidence outcomes, not just frameworks, across key priority areas. This includes:
- Conducting targeted gap analysis against FCA supervisory priorities
- Reviewing governance frameworks to ensure effective oversight and accountability
- Assessing operational resilience, third-party risk, and market abuse controls
- Supporting firms in embedding Consumer Duty considerations across complex business models
- Preparing board and senior management materials to evidence challenge, decision-making, and action
We work with firms to ensure they are not only aligned with regulatory expectations but also able to demonstrate this clearly under supervisory scrutiny.
To discuss how these priorities apply to your firm, contact our team.