The FCA has published the findings of its multi-firm review examining how firms identify, manage, mitigate and disclose conflicts of interest, and how their arrangements support the fair treatments of investors.

The review covered firms operating across private equity, private credit, and real estate. While the FCA found examples of effective governance and strong controls, it also identified inconsistencies in standards, particularly where firms' frameworks had not evolved alongside increasingly complex business models and investment structures.

Key findings include:

• Governance and oversight: The FCA identified examples of effective governance, including independent oversight and clear escalation procedures, alongside instances where governance and control frameworks had not kept pace with increasingly complex business models.
• Conflicts identification: Good practices included comprehensive conflicts registers, clearly defined responsibilities, and ongoing monitoring throughout the investment lifecycle. In some cases, firms relied heavily on individual judgement and fragmented processes.
• Cross-fund transactions: Good practices included enhanced governance, independent challenge, and valuation oversight. However, some firms relied on existing processes, disclosure, or investor consent, with limited evidence of how competing investor interests had been assessed.
• Information barriers: Effective arrangements included organisational and system-based restrictions alongside active compliance monitoring. The FCA also identified instances where firms relied on staff training and informal safeguards, with limited monitoring.
• Gifts and entertainment: The FCA identified good practices involving clear policies, robust record-keeping and active monitoring, but also identified instances where some firms relied on generic approvals and policy thresholds without sufficiently assessing potential conflicts.

The FCA expects firms to consider the findings and assess whether their existing conflicts management arrangements remain appropriate. It will undertake targeted follow-up supervisory work where necessary.

Please contact Erin Smith ([email protected]) if you have any questions or wish to discuss the findings further.