On 31 October 2025, the Financial Conduct Authority (FCA) published a multi-firm review assessing consolidation in the financial advice and wealth management sector, identifying a range of good practices and areas of increased risk.

Background

The FCA explained that, due to the increased consolidation in the financial advice and wealth management sector in recent years, this multi-firm review aims to support sustainable growth in the sector, minimise poor outcomes and remind firms of the FCA’s expectations on consolidation.

The FCA set out that it reviewed a sample of groups which were acquiring independent financial advisers (IFAs) and established wealth management businesses, providing discretionary investment management and advice solutions to group clients.

Findings

The FCA set out the following examples of good and poor practice in the following areas, including:

  • Group debt management: The FCA set out that good practice included recognition and monitoring of risks, sustainable financing, and having debt security arrangements to protect firms and clients; however, firms could improve in areas such as group level financial resilience and solvency, guarantees being provided by regulated entities, reliance on short term debt financing, stress testing and realisation of resources.
  • Group risk management: The FCA highlighted that some firms had comprehensive group risk coverage, and good structural efficiency and governance; but that other firms had inadequate group risk recognition.
  • Group structure and approach to consolidation: The FCA explained that good practice including firms having integrated group frameworks, but that financial resilience is an area for improvement.
  • Acquisition and integration approach: The FCA made clear that some firms conducted strong due diligence before an acquisition, managed integration post-acquisition and engaged in strategic growth, but that other firms could improve their level of due diligence or address acquisition related issues.
  • Governance and resourcing: The FCA explained that investment in training and monitoring, leadership and strong acquisition and integrations processes represented good practice, and other firms could have better systems and controls frameworks, leadership knowledge and experience and adequate challenge by boards.
  • Conflicts management: The FCA highlighted that it was important when manging conflicts to ensure that there were no incentives, choice in terms of investment options, and robust compliance monitoring, but that other firms should consider their approach where incentives are offered and should ensure there are sufficient risk management processes.

Next steps

The FCA explained that it considers that it is not setting new expectations and are intended to help firms that already exist, and firms with relevant business models should consider these findings and their underlying principles.

The FCA also notes that firms should consider how they may need to reassess their risk management arrangements or group structure to deliver resilient and well-managed growth, in line with the Consumer Duty and in the best interest of market integrity.