FCA Expectations for Wealth Management and Stockbroking Firms

What is the FCA Saying?

The FCA has recently published a “Dear CEO” letter to Wealth Management and Stockbroking Firms to highlight the harms that these firms pose to the market and consumers and outline its updated regulatory and supervisory agenda. While the FCA will still monitor the firms’ compliance of all the regulatory obligations that apply to these types of firms, it places its focus on two areas of particular concern – the prevention of financial crime and the prioritisation of consumer duty.

Prevention of Financial Crime

There is an inherent risk for such firms, by virtue of the nature of their activities, to be exposed to financial crime. Firms are expected to understand the financial crime risks that they can be exposed to and safeguard themselves appropriately. In doing so, firms should not engage in activities that could risk finding themselves guilty of fraud, scams or money laundering. They can do this by ensuring they maintain strong KYC and CDD policies and controls in order to correctly categorise their clients and adopt the appropriate risk approach for each. These systems and controls must be frequently monitored for their quality and efficiency and any weaknesses found should be remediated and improved. It is also necessary for firms to ensure that Compliance Officers and MLROs have the required level of skill, experience and independence to carry out their duties and other staff are sufficiently trained on the prevention of financial crime as well. Firms must also remember their reporting obligations regarding any wrongdoing to the relevant authorities.

Consumer Duty

The importance of protecting consumers remains central to the FCA’s approach. Firms are expected to keep the communications to clients clear, fair and not misleading. They must take the appropriate measures to categorise their clients and assess their vulnerability correctly and only offer products and services that are tailored to the client’s needs, risk profile and circumstances. Firms must make sure that clients fully understand all aspects of the products and services they are provided and any complex or risky investments must be fully justified. The FCA also expects that charges and fees are clearly disclosed to clients and regularly assessed to ensure a balance in the overall cost and value for money offered. Firms must also maintain a strong customer support service and ensure customers understand their rights and limitations to the Financial Ombudsman/FSCS consumer protection status and associated risks of investments.

Wider Expectations

The FCA’s expectations extend far beyond the delineated priority harms, encompassing a spectrum of regulatory obligations. Withing the recent “Dear CEO” letter published by the FCA, the regulator emphasised how imperative it is for firms to not only address the specified key areas but also maintain a comprehensive understanding of their responsibilities. This includes upholding operational resilience, strict adherence to the regulations outlined in the Clients Asset Sourcebook when managing client funds, actively preventing market abuse, and incorporating principles of environmental, social, and governance (ESG) considerations. Moreover, the emphasis on fostering diversity, equity, and inclusion (DEI) is evident. The recently proposed DEI consultation paper sets forth new rules and guidance, providing a framework for firms to take robust and decisive actions against discrimination, bullying, and sexual harassment, thereby solidifying the stance against non-financial misconduct. The FCA’s deliberate inclusion of these themes underscores their significance within the regulatory landscape and emphasises the need for firms to prioritise these areas in their operational frameworks.

FCA Supervisory Measures

The FCA has made clear that its supervision will become more targeted, intrusive and assertive. It will conduct short notice or unannounced visits to firms in order to supervise their compliance with the relevant rules, particularly for financial crime. It will then make any necessary interventions and continue to monitor the firm to ensure any remedial action needed has been taken. Firms should also keep an eye out for a survey that will be circulated by the FCA in December 2023 and which will be used by the FCA to build on its targeted engagement with data strategy.

How Complyport Can Help

If you are a Wealth Management or Stockbroking firm regulated by the FCA and have any queries regarding the expectations set out by the FCA within this recent “Dear CEO” letter, do not hesitate to contact us.

Our team of expert Consultants can assist with:

Financial Crime support Services

  • Financial crime health checks and audits
  • Implementation of financial crime, AML, CTF, ABC, Fraud and market abuse controls and frameworks
  • Ongoing advice on financial crime, AML, CTF, market abuse and fraud prevention
  • Authoring/reviewing financial crime policies
  • Outsourced MLRO support
  • Outsourced KYC and CDD support
  • Resourcing MLROs and financial crime experts
  • Remediation
  • Assistance in identifying Politically Exposed Persons (PEPs)
  • Assistance in navigating international sanctions
  • Expert Witness in financial crime cases
  • Forensics and investigations
  • Design and/or delivery of online or face to face financial crime training

Consumer Duty Support

1. Online Implementation Readiness Assessment:

    • Utilise our user-friendly online questionnaires to demonstrate consideration for Consumer Duty and identify gaps and areas for improvement. This assessment serves as a foundation for developing an effective implementation plan.

2. Consumer Duty Package:

    • Benefit from a holistic package that encompasses various elements, such as:
      • Diagnostic assessment to determine the applicability of Consumer Duty.
      • Report Templates to streamline your documentation process.
      • Working Papers and relevant rules to ensure compliance.
    • Choose from our suite of meticulously designed policy templates*, including:
      • Product Assessment Policy
      • Consumer Duty Working Papers
      • Consumer Duty Monitoring
      • Fair Value Assessment Policy
      • Consumer Duty Diagnostic Assessment
      • Consumer Duty Annual Report

*Please note that policy templates can be customised for an additional fee.

3. Consultancy Services:

    • Access contracted and ad hoc consultancy support, both pre and post-implementation deadline. Our experts will assist you with regulation interpretation and address any personal queries, providing you with peace of mind throughout the process.

Complyport Can Also Assist With

We specialise in supporting the UK financial services industry with compliance guidance, advice and best practice.

  • Operational resilience & Cybersecurity advice
  • CASS advice and protections of client assets
  • Compliance managed services and resourcing compliance personnel
  • Skilled Person Reviews and Regulatory Investigation
  • Prudential support, IFPR, ICARA and financial resilience advice
  • Financial Promotions guidance, support, and management software solutions
  • Comprehensive compliance work-flow management software

Contact Thomas Salmon in our Regulatory Solutions team via email at: thomas.salmon@complyport.co.uk to book a free consultation.


About Complyport

Complyport is a market-leading consulting firm supporting the UK financial services industry for over 22 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.

Complyport can assist with the preparation of a GAP analysis and impact assessment on the investment firm’s capital adequacy and risk management framework of the Company under the regulatory framework.

Don’t navigate the complex world of FCA regulations alone, contact us to see how the regulatory obligations outlined in this article may apply to your firm. Email Thomas Salmon in our Regulatory Solutions team at thomas.salmon@complyport.co.uk to book a free consultation.