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By Simon Goryl (Advisory Director) | 11/04/2024

March 2024 – FCA Dear CEO Letter – Our Take

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In March 2024 the FCA published its latest update on its Asset Management and Alternatives Supervisory Strategy in the form of a Dear CEO letter addressed to both sectors. The letter provides an update on previous communications, tracks the progress the FCA is making in its supervision of the sector, and sets out its priorities for the coming year. Boards of firms must consider the contents of the Dear CEO letter, take action where necessary, and be prepared to demonstrate to the FCA that they have done so where requested.

The letter notes the geopolitical and economic challenges the sectors have faced in the last year, resulting in many firms cutting costs, consolidating, and looking at ways to diversify business models. These challenges are expected to continue into 2024 and will be accompanied by high volumes of business and regulatory change. Firms need to have strong governance arrangements in place to deal with this uncertainty and change, to ensure that risks are managed and that investor and customer interests are prioritised.   

The Assessments of Value and Consumer Duty Section

The need for an Assessment of Value (AoV) for authorised funds, with consideration of price and value under Consumer Duty for both authorised and unauthorised funds, is highlighted in the letter. The FCA intends to continue its work to embed AoV practices that underpin good customer outcomes. We can expect follow-up work with firms where the regulator finds assessments that fall short of their expectations. The FCA also reiterates its intention to carry out a joint multi-firm review with the life insurance portfolio to look at price and value assessments under Consumer Duty throughout the full value chain.

Our Take on Change Management 

The FCA notes that the sector faces significant regulatory change, which presents particular challenges for firms that are also aiming to cut costs. Work on operational resilience continues for many firms working towards the March 2025 deadline for mapping and testing of important business services, as well as further work being needed on ESG and SDR. Some firms may not be resourced to handle this volume of regulatory change alongside existing internal transformation programmes and strategic developments. The FCA will be looking at firms’ governance and resourcing of change management programmes and how they ensure risk is managed and consumer harm is reduced.

FCA Plans for Valuation Practices on Private Assets

Many firms are feeling pressure around the valuation of assets in the context of a changing economic landscape. A higher proportion of private assets are now being held within funds, with valuation information that is less transparent than for publicly traded assets. The FCA plans to run a multi-firm review of valuation practices including consideration of personal accountabilities for valuation practices, governance, management information and Board oversight.

Market Integrity and Disruption

The FCA highlighted its work on reducing and preventing serious harm and its expectation that firms must have robust systems and controls to counter financial crime. Firms should consider how significant liquidity mismatches in funds, large concentrated positions, or significantly leveraged positions could impact the markets during stressed conditions and ensure that such factors are included in risk management frameworks.

The Smarter Regulatory Framework – Policy Priorities

The Dear CEO letter notes that the FCA expects to make significant progress this year on work to implement the Smarter Regulatory Framework, with a focus on MiFID, AIFMD and UCITS. Whilst significant parts of the regulations are expected to be replicated in the FCA Handbook, we can expect to see some changes being proposed with the intention being to make the rules more proportionate for alternative fund managers, update the regime for retail funds, and support technical innovation.

How Square 4 Can Help

At Square 4 we specialise in regulatory compliance across the FCA agenda throughout the wealth and asset management distribution chain. Our specialist consultants have been supporting our clients in successfully implementing regulatory change, value assessments, and other conduct-related issues listed in this Dear CEO letter. Should you wish to discuss the contents of this letter or how Square 4 can help in more detail, please contact us at, or the team directly below.

Simon Goryl –

Elliot Cooper –



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