FCA Outlines Its Updated Approach To Alternative Asset Management Supervision

In a "Dear CEO" letter sent in early August 2022, the FCA outlined the robust approach it will take to the supervision of firms in its alternative asset management portfolio – namely FCA authorised hedge funds, private equity firms and firms that manage and advise alternative assets directly. Relevant firms can expect the FCA to focus on excessive investment risks to retail and elective professional investors, conflicts of interest, inadequate mitigation against ongoing market disruption, poor market abuse controls, and culture, as well as ESG disclosures.

The FCA acknowledged that most firms in the alternatives space deal with professional clients, and those firms should expect the FCA to supervise them proportionately. However, there are firms which deal with retail and elective professionals and as such the FCA will check these firms' business models and approach to consumer protection – a particular focus for the regulator at the moment with the upcoming