UK Financial Conduct Authority calls on private market firms to strengthen conflicts controls as businesses grow

The Financial Conduct Authority (FCA) has called on private market firms to ensure conflicts management keeps pace with growth and increasing business complexity, reinforcing findings from its earlier detailed review. Across private equity, private credit and real estate, standards varied considerably. Some firms demonstrated strong governance and independent challenge, while others failed to identify conflicts adequately or update controls. Recurring weaknesses involved transfers between funds, transactions involving multiple parties, gifts and entertainment, and information barriers. Firms are expected to identify, record, manage and disclose conflicts effectively and demonstrate fair treatment of investors, particularly where investors rely heavily on firms’ judgment and controls. The earlier findings highlighted excessive reliance at some firms on disclosure or investor consent without substantive independent challenge. Firms should assess where their governance, oversight and controls need strengthening. Separately, outside the review, the FCA is examining governance and conflicts concerns involving private credit used to finance consumer litigation claims, including significant risks of harm to investors, consumers and markets.