The Financial Conduct Authority has published the findings of its multi-firm review of conflicts of interest in private markets, concluding that firms vary considerably in how well they identify and manage conflicts and calling on managers to ensure their controls keep pace with their growth.

The review, released on 23 October, covered firms managing funds or providing portfolio management and advisory services in the UK across private equity, private credit and real estate. It ran in two phases: a questionnaire sent to a sample of firms spanning different business models, asset classes, ownership structures and sizes, followed by on-site visits to a selected group. The FCA assessed firms against Handbook requirements on conflicts, governance, systems and controls, and disclosure, including SYSC 10 and COBS 11.7.

The regulator found examples of good practice, including strong governance arrangements, effective oversight and independent challenge. But it said some firms were failing to identify conflicts adequately or keep their controls up to date as business models grew more complex. Recurring weaknesses were identified in cross-fund transfers and multi-party transactions, gifts and entertainment, and information barriers.

"Firms need to ensure their management of conflicts of interest keeps pace with growth in their size and complexity," said Michelle Beck, director of wholesale buy-side at the FCA. "We found good practice across the sector, but standards varied considerably. We want to encourage confidence in the UK's private markets. Firms should act on our findings and identify where they can strengthen controls."

The FCA added that, although outside the scope of this review, it is separately examining governance and conflicts concerns relating to the use of private credit to fund consumer litigation claims, which it said carries significant risks of harm to investors, consumers and markets.

For private credit managers, the cross-fund transfer finding is the most directly relevant. Moving loans between vehicles, continuation funds and evergreen structures has become more common as platforms add wealth products and secondary solutions, and each transfer requires a defensible approach to pricing and allocation between investor groups. The review follows the FCA's earlier work on private market valuations and indicates that conflicts management will remain a supervisory priority as UK private markets expand.