FCA has written to all corporate finance firms (“CFFs”) outlining the harms to consumers and markets that it believes are most likely to arise from the business models of the CFFs and the strategy to address these harms. The letters also set out FCA expectations of these firms. There are currently 500 firms in the portfolio.
Some key expectations FCA has of firms include:
- Compliance with the client categorisation requirements in COBS 3 in relation to clients they provide a service to in the course of carrying on a regulated activity, particularly COBS 3.5;
- Careful consideration of the application of the Consumer Duty to the firm’s activities and ensuring that it is correctly applied;
- Using regulatory permissions to advance a legitimate business purpose, and to construct and maintain their permission profile in a way that accurately reflects this; and
- Ensuring that market abuse controls are tailored to their individual business models and to properly identify, record and manage conflicts of interest, as set out in Principle 8 and the rules in SYSC 10.
FCA expects CFFs to discuss the contents of this letter with directors and Boards and agree appropriate actions, by the end of November 2023.