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Dear CEO | Release Date: 1st March 2024

To read a shorter summary of this Dear CEO letter, click here.

To access the original FCA document, click here.

Long Summary

The Financial Conduct Authority (FCA) has issued an updated supervisory strategy for the Asset Management and Alternatives sector. This comprehensive letter builds on the previous communications from August 2022 and February 2023, reflecting changes in the risk environment and outlining the regulatory focus for the coming year.

Sector Challenges and Responses in 2023

Asset managers experienced a tumultuous year in 2023, marked by heightened uncertainty and market shocks. Firms faced difficulties in raising and maintaining assets, leading to various strategic responses such as cost-cutting, consolidation, and exploring new opportunities. While there are signs of improvement, the volatile geopolitical and economic climate persists, with potential ongoing impacts on business models, products, services, and customer outcomes.

FCA’s Key Areas of Regulatory Focus

Good Governance in Uncertain Times:

Assessments of Value and Consumer Duty:

Change Management and Operational Resilience:

Valuation Practices for Private Assets:

Reducing and Preventing Serious Harm:

Market Integrity and Disruption:

Supporting Innovation:

Promoting Competition and Positive Change:

Implications for Firms

Governance and Decision-Making:

Adherence to Regulatory Changes:

Market Conduct and Financial Crime Compliance:

Innovation and Technological Advancements:

Preparedness for Systemic Changes:

Take-Aways and Actions for Affected Readers

1. Ensuring Robust Governance and Oversight – Firms must ensure effective governance structures are in place, with clear responsibilities and accountability for managing risks and changes.

2. Compliance with Regulatory Requirements – Adherence to AoV and Consumer Duty, operational resilience guidelines, and SDR is paramount. Firms should engage in ongoing assessments and improvements to meet these regulatory standards.

3. Focus on Market Integrity and Financial Crime Prevention – Effective risk management practices must be in place to address market integrity and financial crime risks. Compliance with the UK sanctions regime is essential to avoid regulatory repercussions.

4. Embracing Technological Innovation – Firms should safely integrate technological advancements, aligning with FCA guidelines and global standards.

5. Preparing for Regulatory Changes and Reforms – Firms must be proactive in adapting to upcoming regulatory changes, including those related to fund management, disclosures, and international standards.

6. Engaging with Regulatory Developments – Active engagement in FCA’s consultation processes and staying informed about regulatory developments is crucial for compliance and strategic planning.


The FCA’s updated supervisory strategy for the Asset Management and Alternatives sector requires firms to navigate through a landscape of regulatory changes, market challenges, and innovation opportunities. CEOs and Boards are responsible for ensuring their firms’ compliance with FCA requirements and mitigating potential harms to investors and the market. Proactive and informed actions are essential for firms to align with the FCA’s regulatory focus and uphold the integrity of the UK’s financial system.

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