FCA consolidation review: Lessons for wealth management

What happened?

The FCA published the findings of its review into consolidation within the financial advice and wealth management sector. The review acknowledged that consolidation can deliver benefits such as operational efficiencies, growth opportunities and stronger businesses. Alongside identifying examples of good practice, the regulator outlined areas where firms need to improve and clarified its expectations for firms involved in acquisitions and integrations.

The findings are expected to support further growth and consolidation activity by providing greater clarity on the standards the FCA expects firms to meet.

Why does it matter?

As consolidation continues across the sector, firms face increasing regulatory scrutiny over how acquisitions are assessed, integrated and governed. The FCA has made clear that successful consolidation requires more than completing a transaction. Firms must demonstrate robust due diligence, effective integration planning, strong governance and appropriate financial resilience.

The review provides an important benchmark for consolidators, helping firms understand both the practices the FCA considers effective and the areas likely to attract regulatory attention.

Who is affected?

Key risks

• Inadequate regulatory and compliance due diligence before acquisitions.
• Applying a standardised or “tick-box” approach to due diligence.
• Failure to tailor integration plans to the acquired firm’s characteristics and client profile.
• Insufficient compliance, risk and governance resources as firms scale.
• Lack of independent challenge at board and committee level.
• Leadership teams lacking the experience or expertise required to oversee increasingly complex businesses.
• Weak group debt management and financial resilience frameworks.
• Insufficient stress testing and risk monitoring.
• Poor oversight of customer outcomes during post-acquisition integration.

Actions to take

• Review acquisition due diligence frameworks to ensure regulatory, compliance and conduct risks are thoroughly assessed.
• Challenge third-party due diligence findings and ensure firms fully understand identified risks.
• Tailor due diligence and integration processes to the specific profile of each acquired business.
• Strengthen governance frameworks, including independent challenge mechanisms.
• Assess whether compliance, risk and operational resources remain appropriate following growth.
• Review group financial resilience and debt management arrangements.
• Enhance stress-testing capabilities and emerging risk monitoring processes.
• Establish clear oversight of customer outcomes throughout the integration process.

Wider implications

The FCA’s review signals that consolidation will remain an important feature of the financial advice and wealth management landscape. However, firms pursuing growth through acquisitions should expect ongoing regulatory scrutiny, particularly around governance, operational resilience and customer outcomes.

The findings also reinforce a broader regulatory trend towards ensuring that firms can demonstrate effective oversight and risk management as their businesses become larger and more complex. Growth alone will not be viewed as a success if firms cannot evidence that they maintain strong controls and good customer outcomes.

Recommendations

Firms involved in acquisition activity should treat due diligence and integration as strategic regulatory priorities rather than procedural exercises. Boards should ensure they have sufficient expertise to oversee increasingly complex operations and should regularly assess whether governance, compliance and risk frameworks remain fit for purpose as the organisation grows.

Businesses should also review financial resilience arrangements, stress-testing capabilities and customer outcome monitoring processes to ensure they align with FCA expectations.