Key Takeaways
- • The FCA is intensifying regulatory scrutiny of private markets through enforcement actions and compliance reviews, focusing on financial crime controls, client categorization, and valuation practices within corporate finance firms and asset managers.
- • Private markets are transitioning from niche to mainstream investment vehicles, but significant regulatory gaps remain in transparency, leverage monitoring, and investor disclosure—areas the FCA is actively working to illuminate through detailed reviews and international coordination.
- • Recent enforcement actions against major financial institutions, including a £44 million fine imposed on Nationwide Building Society in December 2025 for deficiencies in anti-financial crime systems, signal the FCA's commitment to holding firms accountable for control failures in the private markets ecosystem.
- • The FCA's outcomes-focused regulatory approach emphasizes stronger data collection and investor clarity, requiring firms to improve record-keeping, management information systems, and market abuse detection capabilities across asset management and alternative investment sectors.
- • Compliance gaps identified in recent reviews span financial crime prevention, market disclosure by listed issuers, insider trading detection, and leverage monitoring—creating enforcement risk for firms operating in private markets or managing alternative investments.
Summary
The Financial Conduct Authority is placing private markets under heightened regulatory scrutiny, recognizing both the sector's growing economic importance and the systemic risks embedded in less transparent corners of the alternative investment landscape. In a speech delivered at the Investment Association's Private Markets Summit on July 2, 2025, FCA deputy chief executive Sarah Pritchard articulated the regulator's strategic shift: bringing private markets "out of the shadows and into the light" through targeted enforcement, compliance reviews, and international coordination on valuation and leverage practices.
The FCA's enforcement activity reflects deepening concerns about control failures across the financial services industry. In December 2025, the FCA imposed a £44 million fine on Nationwide Building Society for serious deficiencies in anti-financial crime systems and controls, exemplifying broader enforcement trends. Recent compliance reviews of corporate finance firms have revealed significant gaps in financial crime controls and client categorization practices. Asset managers face separate scrutiny regarding market abuse detection, with the FCA examining record-keeping, management information systems, and investigative procedures. These reviews underscore the regulator's view that firms managing or facilitating private market transactions lack adequate safeguards.
The FCA's private market valuation review, conducted over a two-stage process during the preceding year, represents the regulator's data-driven approach to understanding systemic risks. Stronger data collection on valuations and leverage is positioned as critical to sustainable growth in private markets and investor confidence. This reflects the FCA's stated commitment to outcomes-focused regulation: granting firms flexibility to innovate while ensuring investors possess the information necessary for informed decision-making. The regulator has also increased focus on market disclosure failings by listed issuers and insider trading detection, with several cases already in the public domain.
Institutional investors and alternative investment professionals should anticipate sustained FCA engagement on private markets compliance over the coming period. The regulator's emphasis on financial crime controls, leverage monitoring, and client categorization suggests that firms operating in this space—including asset managers, corporate finance advisors, and alternative investment platforms—face heightened enforcement risk unless compliance frameworks are materially strengthened.
The FCA's enforcement activity reflects deepening concerns about control failures across the financial services industry. In December 2025, the FCA imposed a £44 million fine on Nationwide Building Society for serious deficiencies in anti-financial crime systems and controls, exemplifying broader enforcement trends. Recent compliance reviews of corporate finance firms have revealed significant gaps in financial crime controls and client categorization practices. Asset managers face separate scrutiny regarding market abuse detection, with the FCA examining record-keeping, management information systems, and investigative procedures. These reviews underscore the regulator's view that firms managing or facilitating private market transactions lack adequate safeguards.
The FCA's private market valuation review, conducted over a two-stage process during the preceding year, represents the regulator's data-driven approach to understanding systemic risks. Stronger data collection on valuations and leverage is positioned as critical to sustainable growth in private markets and investor confidence. This reflects the FCA's stated commitment to outcomes-focused regulation: granting firms flexibility to innovate while ensuring investors possess the information necessary for informed decision-making. The regulator has also increased focus on market disclosure failings by listed issuers and insider trading detection, with several cases already in the public domain.
Institutional investors and alternative investment professionals should anticipate sustained FCA engagement on private markets compliance over the coming period. The regulator's emphasis on financial crime controls, leverage monitoring, and client categorization suggests that firms operating in this space—including asset managers, corporate finance advisors, and alternative investment platforms—face heightened enforcement risk unless compliance frameworks are materially strengthened.
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