Your guide to this week in regulation

This week, we lead with the Financial Conduct Authority’s (FCA’s) wealth management survey, covering around 400 firms and setting out findings on vulnerability practices, fair value and financial crime controls as the market consolidates. Elsewhere, the FCA has warned consumers about the risks of unregulated loan notes and mini-bonds, following the collapse of a litigation funder that raised capital through such products.

Meanwhile, new FCA rules on non-financial misconduct take effect this week, extending Code of Conduct coverage across non-banking firms to bullying, harassment and violence linked to an individual’s role, alongside new Fit and Proper guidance. We conclude this week with the European Securities and Markets Authority’s (ESMA’s) consultation on a new reporting framework for clearing activity at recognised third-country central counterparties under EMIR 3.

Separately, the FCA has published feedback on firms’ motor finance compensation scheme implementation plans, finding that many plans remain high level and lack delivery detail, despite the scheme’s partial suspension pending legal challenges.

FCA reviews wealth management market

The FCA has published its 2026 wealth management survey, covering around 400 discretionary portfolio management firms supporting 5.5 million retail clients and managing close to £1 trillion in assets.

The survey finds the market becoming more concentrated, with the ten largest firms now holding 89 per cent of clients, up from 70 per cent in 2022. Firms have made progress identifying clients with characteristics of vulnerability, rising from 68 per cent to 83 per cent since the last survey, though practices supporting those clients remain inconsistent. The FCA also found gaps in financial crime controls, including firms not refreshing checks on higher-risk clients, and pricing that is not always clear or easy to compare. It flagged AI as a growing source of fraud and cyber risk alongside its benefits.

As the market keeps consolidating, this is a useful moment for firms in the sector to weigh their own governance, oversight and controls against these findings.

Read more on the wealth management survey report

FCA warns on mini-bond risks

The FCA has warned consumers about the risks of loan notes and mini-bonds offered by unregulated companies, after the collapse of litigation funder Woodville Consultants, which raised over £300 million from retail investors through unregulated loan notes.

These products were permanently banned from mass marketing to retail investors in January 2021, but consumers can still encounter adverts on social media, websites and other online platforms promising high fixed returns. The FCA highlighted several warning signs, including pressure to invest quickly, unclear explanations of how money could be lost, and unsubstantiated claims that an investment is asset backed. It also flagged unregulated introducers passing consumers to high-risk investments, often for a fee, and consumers being encouraged to certify themselves as sophisticated or high-net-worth investors.

Firms with introducer arrangements or client-facing roles in this space would do well to review their exposure and make sure staff can recognise and challenge these red flags.

Read more on unregulated loan notes and mini-bonds

Non-financial misconduct rules take effect

New FCA rules on non-financial misconduct (NFM) take effect today, extending the Code of Conduct (COCON) to cover bullying, harassment and violence against colleagues in non-banking firms, where this relates to an individual’s role.

The new rule, COCON 1.1.7FR, applies only where there is a sufficient work-related link, and does not apply retrospectively. Alongside it, the FCA has finalised guidance under PS25/23 to help firms apply COCON and the Fit and Proper test (FIT) with more confidence, covering the boundary between work and private life, reasonable steps for managers, and how unproven allegations and social media conduct should be assessed. Firms are not expected to monitor employees’ private lives or investigate trivial or implausible allegations.

Staff policies, conduct breach reporting, fitness and propriety assessments and regulatory references need to reflect the new rule and guidance from today.

Read more on non-financial misconduct in financial services

ESMA consults on clearing activity reporting

ESMA has published a consultation on draft regulatory and implementing technical standards specifying the content and format of annual reporting on clearing activity at recognised third-country central counterparties, under Article 7d of EMIR as amended by EMIR 3.

The consultation sets out ESMA’s proposals across three areas:

scope, covering clearing members and clients but not indirect clients, and extending to derivatives, securities, securities financing transactions and other financial and non-financial instruments.
content, including the specification of instruments, the methodology for average values cleared and the reporting of margins.
format, designed to reuse information already available through existing reporting channels and limit new burden.
ESMA expects to publish a final report in the fourth quarter of 2026.

Those within scope of the reporting obligation have until 12 October 2026 to review the proposed templates and respond.

Read more on ESMA’s consultation on clearing activity reporting