Key Takeaways
- • The FCA's October 23, 2026 multi-firm review of conflicts of interest in private markets found that conflicts frameworks did not always keep pace with firm growth, and that UK-based activities framed as advisory-only were often scoped too narrowly.
- • Recurring weaknesses were identified in cross-fund transfers and continuation transactions, gifts and entertainment, and information barriers, with the FCA stating that disclosure is a supplementary control rather than a substitute for conflicts management.
- • The FCA said LPAC consultation should not be the primary means of managing material conflicts, and that third-party valuations alone were insufficient mitigants where decision-making was not clearly separated.
- • CP26/27 proposes a single remuneration code for solo-regulated firms (new SYSC 19AA), narrowing material risk taker definitions and making malus and clawback non-mandatory, with a policy statement expected in Q1 2027.
- • CP26/35 proposes monthly dealing and a 90-day minimum notice period for authorised funds with at least 50% of scheme property in illiquid assets, with comments due 11 December 2026.
Summary
The Financial Conduct Authority published its multi-firm review of conflicts of interest and fair customer treatment in private markets on 23 October 2026. The review covered UK firms managing funds or providing portfolio management or advisory services across private equity, private credit and real estate, and was conducted in two phases: a questionnaire to a broad sample of firms, followed by on-site visits to a selected group. The FCA stated that conflicts management must reflect a firm's business. While many firms demonstrated effective governance, standards varied considerably, and frameworks did not always evolve as business models became more complex. The FCA identified recurring weaknesses in cross-fund transfers and continuation transactions, gifts and entertainment, and information barriers. It also found that some firms describing their UK activities as advisory-only, because investment decisions were taken overseas, scoped conflicts frameworks too narrowly despite UK staff being involved across the investment lifecycle. The FCA will conduct targeted follow-up work.
The FCA's Consultation Paper CP26/27, which closed on 16 September 2026, proposes replacing the AIFM, UCITS and MIFIDPRU remuneration codes with a single outcomes-focused code (SYSC 19AA) for solo-regulated firms. The code would apply to full-scope UK AIFMs, UK UCITS management companies and non-SNI MIFIDPRU firms, and would drop the MIFIDPRU tiered regime. Material risk takers would be narrowed to staff whose activities have a material impact on conduct, investor interests or compliance. Malus and clawback would no longer be mandatory, and the mandatory remuneration committee and annual review requirements would be removed. The FCA expects a policy statement in Q1 2027.
On 8 October 2026 the FCA published CP26/35, proposing that non-UCITS retail schemes investing at least 50% of scheme property in inherently illiquid assets deal no more than monthly and apply a minimum 90-day notice period. The proposals extend beyond real estate, which the FCA had addressed in a 2020 consultation it did not pursue. Existing funds would have a two-year implementation period, and the consultation closes 11 December 2026. Separately, the FCA's CP26/34 on transaction reporting closes for responses on 6 November 2026, with the new regime effective 3 April 2028.
The FCA's Consultation Paper CP26/27, which closed on 16 September 2026, proposes replacing the AIFM, UCITS and MIFIDPRU remuneration codes with a single outcomes-focused code (SYSC 19AA) for solo-regulated firms. The code would apply to full-scope UK AIFMs, UK UCITS management companies and non-SNI MIFIDPRU firms, and would drop the MIFIDPRU tiered regime. Material risk takers would be narrowed to staff whose activities have a material impact on conduct, investor interests or compliance. Malus and clawback would no longer be mandatory, and the mandatory remuneration committee and annual review requirements would be removed. The FCA expects a policy statement in Q1 2027.
On 8 October 2026 the FCA published CP26/35, proposing that non-UCITS retail schemes investing at least 50% of scheme property in inherently illiquid assets deal no more than monthly and apply a minimum 90-day notice period. The proposals extend beyond real estate, which the FCA had addressed in a 2020 consultation it did not pursue. Existing funds would have a two-year implementation period, and the consultation closes 11 December 2026. Separately, the FCA's CP26/34 on transaction reporting closes for responses on 6 November 2026, with the new regime effective 3 April 2028.
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