Insights from our multi-firm and other supervisory work involving wholesale banks. We share these to help a wider group of firms learn from the experience of others and our findings.
Our multi-firm work overview
We published our findings on the multi-firm reviews into share buybacks, gifts and entertainment, off-channel communications and transaction governance on 7 August 2025.
On 12 December 2025, we published our review on best execution.
This delivers on the supervisory priorities previously communicated to the sector[1].
We’re highlighting this work in order to:
- Help firms benchmark themselves and, in providing practical examples, assist them to achieve regulatory outcomes more efficiently.
- Provide data and insights not typically accessible, such as aggregated information from firms’ regulatory reports.
- Highlight areas where the market is performing well and where improvements are needed.
Our work has a particular focus on conflicts of interest. Market participants need to have confidence that conflicts of interest are managed.
In carrying out our work, we have used data firms provide to us through their reporting of transactions and focused on outcomes. We have employed different methodologies in this work, from extensive data analytics and broad engagement with market participants to more focused reviews.
To make it easier for firms, we are consolidating our findings in one place. This supports our strategy 2025-2030[2] commitment to being a smarter regulator. We will add new reports as they become available. Previously published reports are also available.
We thank the firms that contributed to this work and enabled us to share these insights.
Managing conflicts of interest: multi-firm work
Best execution
This review will be of interest to banks and brokers who provide securities dealing and execution, as well as investors in securities, including asset managers.
Best execution refers to the obligation on firms to take all sufficient steps to get the best possible results for their clients when executing their orders.
We reviewed 8 wholesale banks dealing and executing UK cash equities.
We were encouraged to find stronger practices compared to our 2014 thematic review.
Of the areas we assessed, banks generally had strong practices in assessing the scope of best execution. We also found no evidence that internalisation was damaging client outcomes.
Banks’ monitoring of best execution was able to identify good and poor outcomes. We also saw evidence of banks taking action to address examples of poor outcomes.
In contrast, the quality of management information (MI) to support senior management oversight was variable. We found some MI was comprehensive, but we also found examples of it being either too high level or overly complex.
While we observed some good practices in governance and oversight, this was also where we found the least progress made since the 2014 review. Specifically, we found the need for improvement in the challenge from the second line of defence. The banks who were the strongest in this area had empowered their compliance functions, supporting them with the right data and tools.
Gifts and entertainment
This review will be of interest to banks and other firms where employees may receive gifts and entertainment.
A potential conflict can occur when a wholesale bank employee receives gifts or entertainment leading to preferential treatment for the donor, potentially at the expense of a client.
Typically, wholesale banks manage this conflict through policies, controls and limits around gifts and entertainment, including maintaining a register for employees to declare gifts and entertainment they have received (often above a certain value). This register allows a firm to check where the above conflict might arise.
This review examined gifts and entertainment given by brokers to wholesale banks to assess the operation of the above control.
What we did
We analysed gift and entertainment registers from a sample of wholesale banks and wholesale brokers covering a four-month period. This allowed us to compare records of gifts and entertainment received versus given. We also reviewed policies and procedures associated with gifts and entertainment as well as breach logs.
What we found
- Most entries on registers involved entertainment rather than gifts.
- A higher number of instances of entertainment recorded as being given by brokers to wholesale banks, compared to a lower number of instances of entertainment recorded as received by wholesale banks from brokers. This was a consistent pattern.
For example, one wholesale bank had a policy requiring all broker-provided entertainment to be declared regardless of value, yet our analysis found discrepancies:
- For the relevant period, the bank recorded around 150 instances of entertainment received from brokers.
- But brokers in our scope reported around 500 instances of entertainment being given to the bank.
- Many of these were low value.
- Brokers provided 93 instances of entertainment over £100 with only 9 of these being declared by the bank.
- The highest value entertainment we saw brokers providing was between £300-400 although given our conservative assumptions in analysing the data, the true value could be higher.
- We observed groups of employees being given the same entertainment but none recording it.
- We identified individuals receiving more than one instance of entertainment but not declaring any of them. The highest number we identified was 19 separate instances of entertainment received by one individual from the same broker. None were declared.
- This firm had issued 39 policy reminders through this period.
Key questions for firms to consider
- Are firms confident in the clarity of their policies and procedures for gifts and entertainment given and received?
- Why are groups of employees failing to record entertainment received? What does this indicate?
- Crucially, where there are breaches known to firms, senior management may want to consider whether they are concentrated in a particular area and also to judge whether undeclared entertainment has given rise to negative outcomes for clients or markets.
Registers and breaches
A conflicts of interest register is a record firms use to document conflicts of interest that can arise in the course of their business.
We examined conflicts of interest registers and breach data relating to conflicts of interests across 7 wholesale banks.
In most, we saw scenarios being added to reflect changes in business scope, eg expansion into new markets/products. One firm had not added any new business-related scenario for 3 years. In such circumstances, senior management may wish to challenge whether this reflects the firm’s business activities.
Breach data primarily involved internal policy violations put in place to manage conflicts of interest, such as committing to transactions before obtaining full conflicts clearance. One firm stood out in being the only one not to have recorded any such breaches over a 3-year period. In such circumstances, firms may wish to challenge whether their controls are as strong as the data suggests.
Preventing market abuse: multi-firm work
Off-channel communications
This review will be of interest to wholesale banks and other firms in scope of the recordkeeping rules set out in SYSC 10A.
Off-channel communications are those that take place outside of monitored, recorded channels a firm has approved.
We reviewed 11 firms to assess their efforts to strengthen frameworks for managing off-channel communications.
We found that all firms in our sample had made improvements in the past 2 years.
Firms continue, however, to see breaches of their internal policies. They occurred across all staff grades with 41% involving individuals at the director grade or above.
Care needs to be taken when interpreting the breach data. For example, a breach of a firm’s internal policy may not represent a breach of FCA requirements. Consideration should also be given to the size of the organisation.
Separate to the above work, we have observed examples of non-compliance with policies on the use of personal mobiles on the dealing floor. In one example, despite concerns being raised previously, a formal compliance inspection – as opposed to first line management – was required to address the non-compliance. As well as raising concerns around the firm’s ability to ensure all in-scope conversations are recorded, this potentially highlights a wider issue around first line culture when non-compliance is not acted upon.
Inside information
We have separately seen issues where insider lists have not been well maintained.
In one instance, multiple IT employees had access to folders containing inside information but were not tracked by the control room. In another instance committee members were wall crossed but not added to the insider list.
We will follow up on this to see if these issues are more systemic.
Risk management: multi-firm work on transaction governance
This review will be of interest to wholesale banks.
We reviewed 6 wholesale banks to assess transaction governance.
We did not find widespread weaknesses, although some banks had more robust processes than others. Stronger frameworks gave senior management greater confidence in identifying and managing risks effectively.
Client Assets Sourcebook (CASS) compliance
Robust client asset arrangements help firms build confidence and trust with clients, providing them with clear information about how their money is handled, and reducing the risk of misuse and loss if the firm becomes insolvent.
Our work shows that while arrangements across the industry have improved, certain issues persist.
Title Transfer Collateral Arrangements (TTCA)
Some firms misuse TTCAs by:
- Holding all client funds or assets under a TTCA without an actual client obligation.
- Failing to monitor customer obligations properly.
- Holding money or assets under TTCA without appropriate agreements in place.
Change management
Frequent corporate transactions and technological advancements have increased the pipeline of change activity. We have seen a significant rise in CASS breaches due to:
- Insufficient CASS consideration at the scope and planning stage.
- Lack of testing, impact analysis, and ongoing scrutiny throughout the programme lifecycle, including post implementation reviews.
- Weak oversight and challenge of change programmes at third-party administrators.
Interest on client money
Our enhanced scrutiny has uncovered more CASS breaches related to delays in allocating client money interest. Firms must ensure their approach aligns with client money rules, the client's best interests’ rule (COBS 2.1), and the Consumer Duty.
IT control framework
An increased number of CASS breaches in firms’ annual reasonable assurance reports highlight IT control failures. A strong operational environment, which is required to comply with CASS, depends on a secure IT framework. We have seen firms suffer system hacks, outages, and loss of access to their books and records – emphasising the need for robust IT controls.
Reconciliations
Aside from using external data to populate internal records, common CASS reconciliation failures include:
- Missing or unclear break narratives, making discrepancies hard to trace.
- Excluding accounts with zero balances from reconciliations.
- Misunderstanding internal client money reconciliation rules and margin transaction requirements.
