Global Trustee and Fiduciary Services Bite-Sized Issue 6 2025

AIFMD Review into Smaller Asset Management Firms Finds Most are Meeting Expectations On 8 May 2025, the Financial Conduct Authority (FCA) published the findings of its review into smaller asset management firms, noting that it finds most are meeting its expectations. The review was part of the FCA’s plans to focus on smaller firms to identify business models posing greater risks of harm to consumers as part of its 2022 Alternatives supervision strategy. The FCA says the review aims to help newmarket entrants, smaller firms and growing organisations benchmark sound risk management practices and better understand regulatory expectations. Its findings support customers investing confidently, by providing firms with examples of good practice and highlighting where some need to improve. The findings focus on 3 areas: • High-risk investments (HRIs); • Conflicts of interest; and • The Consumer Duty. High-risk investments (HRIs) To make sure firms were complying with relevant marketing restrictions, the FCA says it considered the importance of effective product governance and, where applicable to a firm’s business model: • Clear and compliant financial promotion materials; and • Processes for investor/client assessment and categorisation. The FCA says it found most firms offering HRIs were able to clearly categorise their products. However, some firms did not have sufficient processes in place to make sure HRIs are only sold to clients if they are appropriate. Conflicts of interest The FCA says it found good conflicts of interest practices at some firms, but many others had ineffective conflict management arrangements. This included smaller firms where senior staff held more than one role that failed to recognise conflicts from their overlapping responsibilities to make sure that, where conflicts cannot be prevented, they are documented, reviewed and disclosed where required. Consumer Duty The FCA says that most firms are making good progress to embed the Consumer Duty in their activities where it is relevant. But some smaller firms still need to understand how the Duty applies to their business model as they have not yet adjusted their processes. The FCA says it is working with those firms to make improvements and will continue to monitor their conduct on these topics. Link to FCA Findings here Investor Services Bite-Sized Global Trustee and Fiduciary Services QUICK LINKS Issue 6 | 2025 AIFMD BENCHMARKS REGULATION CBDC COSTS & CHARGES CRYPTOASSETS ETF FINTECH FUND LIQUIDITY IOSCO MIFID II/MIFIR OPERATIONAL RESILIENCE PRIIPS SIU SUSTAINABLE FINANCE/ESG T+1 ASIA PACIFIC NORTH AMERICA UNITED KINGDOM