On 23 October 2026, the Financial Conduct Authority (FCA) the findings from its multi-firm review of how firms identify, manage, mitigate and disclose conflicts of interest in private market assets.
Background
The FCA highlighted that this multi-firm review will be of interest to:
- Asset managers.
- Alternative investment fund managers.
- Investment advisers operating in private markets.
The FCA also emphasised that while the review focused on private equity, private credit and real estate firms, many of the observations may also be relevant to firms operating in other areas of private markets and may also be of interest to investors, wealth managers, financial advisers, service providers, trade bodies and regulators.
Summary
The FCA set out findings in the following areas:
Governance and oversight
- Firms have different inherent conflicts of interest, reflecting differences in business models and ownership structures: Conflicts risk varies depending on firms’ business models, investment strategies and ownership structures. Firms operating across multiple asset classes, funds and investor groups face more numerous and complex conflicts than firms with simpler structures.
- More complex business models need stronger controls: The FCA found a clear link between business complexity and conflicts risk. More complex firms require stronger governance, escalation and oversight arrangements, with frameworks reflecting the substance of activities rather than their legal form.
- Identifying conflicts promptly: Strong firms embedded conflict identification throughout the investment lifecycle using training, escalation routes, monitoring and integrated systems. Weaker firms relied more heavily on individual judgement and informal processes.
- Internal conflicts documentation: Stronger firms maintained comprehensive conflicts registers, policies and procedures covering key risk areas, supported by clear responsibilities and escalation processes.
- Using software, training and keeping records: Good practice included detailed audit trails, governance records, specialist technology and tailored staff training. Firms should maintain adequate records demonstrating compliance with policies and obligations.
- Oversight of conflicts: Strong firms operated dedicated governance committees and robust oversight arrangements. Limited Partner Advisory Committees were used as a supporting control rather than a substitute for internal governance.
Personal conflicts
- Personal account dealing and other personal investments: Personal investments can create conflicts where employees’ interests overlap with those of investors. Firms generally maintained approval, monitoring and reporting arrangements for personal dealing.
- Gifts and entertainment: Although all firms maintained policies and approval thresholds, the FCA found significant variation in how effectively gifts and hospitality controls operated in practice.
- Clear frameworks and detailed records: Strong firms maintained detailed registers recording value, business purpose, conflict considerations and approval decisions, creating a robust audit trail.
- Areas of higher risk and exposure: High-value hospitality, sporting events and repeated entertainment were identified as areas requiring enhanced scrutiny and monitoring.
- Third parties and conflicts: Many firms were less able to demonstrate how conflicts associated with gifts and hospitality provided to third parties had been assessed and managed.
Conflicts across the investment lifecycle
- Origination and deal sourcing: Strong firms identified conflicts early through transaction screening and early legal and compliance involvement.
- Clear roles and responsibilities: Effective firms embedded conflicts management within formal decision-making processes, supported by clear escalation routes and independent challenge.
- Information controls: Robust information barriers, surveillance and access controls helped prevent misuse of confidential information.
- Allocation: Strong firms maintained documented allocation methodologies and governance oversight to support investor fairness.
- Connected and multi-party transactions: These transactions create heightened conflicts risks and require enhanced governance, independent valuations and additional oversight.
- Cross-fund transactions and continuation vehicles: Because firms may sit on both sides of a transaction, strong governance, independent challenge and transparent valuation processes are essential.
- Investor alignment: Strong firms aligned manager and investor interests through general partner commitments, governance controls and oversight of commercial incentives.
- Investor fairness: Most-favoured-nation (MFN) clauses and side letters: Strong firms treated MFNs clauses and side letters as part of broader investor fairness frameworks supported by governance and compliance oversight.
- Disclosures: The FCA emphasised that disclosure should supplement, rather than replace, robust conflicts management.
- Managing conflicts throughout the investment lifecycle: Firms should identify conflicts early, provide effective oversight and challenge, demonstrate investor fairness and adapt governance frameworks as business complexity increases.
Next steps
The FCA found examples of good practice but significant variation in standards. Firms should review their governance, controls, training and oversight arrangements to ensure conflicts are identified and managed effectively and that investor interests remain central to decision-making.
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