The UK’s regulator, the Financial Conduct Authority (FCA), has warned that as part of its work with the Bank of England on its new system-wide exploratory scenario (SWES) focused on risk in private markets, it will be looking at conduct risk as something that is just as important as financial stability risk.
Speaking at the Investment Association’s Private Markets Summit 2026, deputy chief executive Sarah Pritchard said conduct risks are “no less important” than financial stability risks and will be a focus for them during their work over the next few months.
“They can harm investors, erode market integrity and undermine trust. Those are the risks we’re looking at, and we’re looking at them early, taking a system-wide view, and publishing our findings so that the market is clear on our expectations,” she said.
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She said an example of this is the FCA’s valuations work, and a report published in 2025 setting out expectations and good governance practice has already led to tangible change, but that isn’t enough.
“Confidence is earned over time, not through a single review. So we’ll continue to engage at both firm and industry level – and we expect to see clear evidence of how firms have reflected on the findings and embedded them in practice,” she said.
She added that the regulator is also taking this approach with its multi-firm review of conflicts of interest.
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“We are focusing on conflicts because confidence rests on knowing decisions are made in investors’ interests, with incentives aligned to delivering long‑term outcomes.
“We’ve already gathered information about how firms identify conflicts and design their frameworks. Next, we’ll consider how they operate in practice before publishing our findings later this year. These conduct risks matter and should be taken seriously,” she concluded.
