The FCA welcomes consolidation but raises the accountability bar

What happened?

The FCA’s recent multi-firm review of consolidation in wealth management sends a clear message to leadership teams: growth is welcome, but only when it is supported by strong governance, effective oversight and clear evidence of control.

For acquiring firms, this is a shift in emphasis rather than a new rulebook. The regulator is reinforcing expectations that have long existed, while significantly increasing scrutiny of how well firms demonstrate that they meet them in practice.

The FCA has been positive about consolidation’s role in improving customer outcomes and supporting sustainable growth, particularly given government initiatives to increase UK participation in investment markets and the structural shift to drawdown in retirement.

Why does it matter?

The FCA is placing particular focus on whether firms truly understand what they are acquiring and how effectively they oversee acquired businesses once transactions complete.

Regulatory due diligence is no longer treated as a procedural step in the deal process. It must provide genuine insight into advice quality, cultural alignment and historical risk, and firms are expected to act decisively on what they uncover.

Being able to evidence this end-to-end journey – from acquisition rationale through to integration and ongoing supervision – is fast becoming the currency of regulation.

Who is affected?

Consolidators and acquiring firms across wealth management and financial advice, particularly those integrating multiple acquired businesses under a single group structure.

Key risks

• Fragmented compliance and oversight across a group as it scales, reducing visibility and increasing risk.
• Treating regulatory due diligence as a procedural step rather than a genuine assessment of advice quality and cultural fit.
• Being unable to evidence the full acquisition-to-supervision journey when challenged by the regulator.
• Slower growth, increased supervisory attention and operational friction for firms that cannot demonstrate control.

Actions to take

1. Strengthen pre-acquisition regulatory due diligence so it genuinely tests advice quality, cultural alignment and historical risk.
2. Invest in group-wide governance standards and shared technology platforms as the business scales.
3. Adopt consistent suitability processes across acquired businesses to support meaningful management information.
4. Document the acquisition, integration and ongoing supervision journey so it can be evidenced to the regulator.

Wider implications

Centralisation is not simply about regulatory comfort – it creates operational leverage. When compliance, technology and reporting are aligned across a group, leadership teams gain clearer insight into adviser performance, client outcomes and risk trends.

Firms that demonstrate evolved governance and disciplined integration are better placed to execute transactions with confidence and engage constructively with the regulator, turning scrutiny into a competitive differentiator.

Recommendations

TCC supports acquiring firms throughout the full acquisition lifecycle, from pre-acquisition regulatory due diligence to integration, governance design and ongoing compliance oversight, supported by Recordsure’s AI-enabled technology.