FCA publishes Portfolio Letters: have you read yours?
All FCA firms sit within a supervisory ‘portfolio’ which is made up of of firms with the same business model. From time to time, when the FCA wants to communicate out to a particular portfolio, it issues a Portfolio Letter. These set out the FCA’s view of the main risks of harm in a particular portfolio and the action they expect firms to take.
At the end of September 2023, the FCA has issued new letters to:
Corporate finance firms
Platform firms
If you’ve misplaced yours, or want to view historic letters including to other portfolios, you can view them on the FCA’s Supervisory Correspondence page. If you haven’t received a copy of a letter, you may need to contact the FCA to ensure you are on the mailing list.
We work with a number of corporate finance firms and have been asked to interpret the contents of the letter and advise what they should be doing in response. Get in touch if you want to discuss, but here are 5 key points we are urging corporate finance firms to be aware of:
1. If you approve financial promotions for unauthorised corporate clients as part of their capital raising, you will soon need a new regulatory permission to do so
2. Sticking with financial promotions, are you comfortable you are complying with the rules in respect of promotions received by corporate finance contacts?
3. Think carefully about whether you can materially affect retail customer outcomes, either on the client or corporate finance contact side – if you can, you need to ensure Consumer Duty compliance
4. The FCA is flagging that it is concerned with misclassification of retail investors. It would be prudent to review your categorisation and onboarding arrangements
5. Similarly, it would be wise to review market abuse controls. This should now be an area of 'routine' compliance, but the FCA is highlighting that it is still seeing insufficient management of these risks
There are other ongoing developments which may impact firms in this space that the FCA didn’t mention in its letter, not least the new cryptoasset financial promotions rules and the public offer platform regime which is on the horizon. So, the message here is – while the FCA’s letter highlights its current priorities for corporate finance firms, don’t view it as exhaustive.
If you require any help and assistance in relation to these letters, please get in touch.