The UK Wealth Management Merger Wave Isn’t the Risk. Bad Execution Is.
What the FCA’s consolidation review means for advice and wealth management firms
Consolidation in the UK advice and wealth management market is no longer a trend to be analysed. It is a structural feature of the sector. Scale has become a practical response to succession planning pressures, rising regulatory expectations and the cost of delivering consistent client outcomes. The FCA acknowledges this reality in its latest review of consolidation across the sector, which has become required reading for firms pursuing growth through acquisition.
What the review also does is reframe the debate. The question is no longer whether consolidation can benefit consumers, but whether firms are governing growth in a way that protects them. The regulator’s findings suggest that, in some cases, commercial momentum has moved faster than the controls needed to support it, particularly where firms lack the data and management information needed to maintain effective oversight. As Joe Norburn, CEO at TCC Group (TCC, Momenta and Recordsure), explains…
Financial resilience is now a conduct issue
One of the strongest themes in the FCA’s review is prudential resilience. How acquisitions are financed, how debt is structured across groups, and whether stress testing assumptions reflect plausible downside scenarios are all firmly within the regulator’s focus. This emphasis is deliberate. Financial weakness at the group level can quickly trickle down and translate into operational pressure within regulated entities. That pressure can manifest as reduced service continuity, weaker oversight, or cost-driven decision-making – with the impact most likely felt by customers.
The FCA is clearly demonstrating that financial resilience supports the Consumer Duty and should be treated as part of how firms design, finance and govern their growth strategies, not as a separate technical requirement. Firms are expected to move towards continuous, data-driven governance, maintaining consistent oversight as portfolios grow.
As consolidation continues, the regulator expects boards to demonstrate a clear understanding of how growth strategies interact with capital, liquidity and risk appetite, supported by management information and data evidence that demonstrate a reliable, group-wide view of financial and operational risks. Assumptions that may have been workable at a smaller scale are less likely to hold as group structures become more complex.
Governance, culture and the limits of scale
Alongside prudential concerns, the review places sustained emphasis on good governance and culture. Consolidation increases complexity, and with it the risk that weaknesses become harder to identify and harder to challenge.
The FCA highlights that shortcomings in leadership capability, a lack of independent challenge at the board and committee level, and management information that does not provide sufficient, timely insight across increasingly complex group structures can lead to poor outcomes. Without consistent, comparable data on advice quality, and ongoing service standards, senior management cannot exercise meaningful oversight, regardless of the governance structures in place. These are not isolated compliance issues but address the core question of whether senior management can satisfy themselves that the firm is continuing to comply with the Consumer Duty as the firm grows.
Conflicts of interest are another recurring theme. Deferred consideration arrangements, group-wide product strategies and commercial incentives can create tension between growth objectives and customer interests if not actively managed. The regulator expects firms to demonstrate how such conflicts are identified, governed, and mitigated in practice, and how customer interests are protected – supported by clear data trails that evidence decision-making outcomes.
Due diligence and integration: where outcomes are shaped
The FCA’s position on due diligence is unambiguous. A standardised, tick-box approach is not appropriate. Due diligence must be proportionate, risk-focused and tailored to the firm being acquired.
That requires attention not only to permissions and financials, but to advice quality, legacy liabilities, cultural alignment and the target firm’s ability to operate within the acquiring group’s regulatory framework. Weaknesses missed at this stage tend to surface later, during integration, when they are more disruptive and often more costly to address.
The integration itself is treated by the regulator as a critical risk period. Clear plans, adequate resourcing and active monitoring of customer outcomes are expected. Where issues are identified during due diligence, the FCA expects them to be addressed through the integration programme rather than deferred. For firms managing multiple acquisitions, this places a premium on realistic capacity planning, data-led oversight and disciplined execution.
The firms most exposed are not those pursuing consolidation, but those without a clear, repeatable approach to assessing regulatory risk before a deal completes and managing it through integration.
What boards should take from the FCA review
The FCA is explicit that its findings do not introduce new requirements, but they do make clear the expectations on boards, acquirers and senior management teams overseeing complex group structures. The regulator reinforces existing expectations and signals where supervisory attention is likely to focus – doing nothing is not a neutral position as the regulator indicated that it’s ready to intervene where governance, oversight or financial resilience fall short. Firms are expected to benchmark their arrangements against the review and take action where gaps exist.
The good news is that the consolidation itself is not a risk. The risk lies in allowing growth to outpace governance, capital discipline, and operational control; sustainable growth depends on the ability to standardise quality and oversight across the firm’s portfolio. As consolidation programmes scale, firms should embrace technology to enable data-driven decision-making, outcome evidencing and easy access to customer insights, to help improve control while reducing operational drag.
ENDS
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