Speech by Sarah Pritchard (FCA Deputy Chief Executive): Laying the foundation for confidence

Highlights

• Private markets play a central role in the UK's financial system and growth story.
• Confidence in private markets is essential – and comes from strong first-line controls at firms, sensible regulation and a well-connected regulatory system.
• Ahead of reform, we encourage firms to engage with us to make regulation more effective and better tailored to the UK market. We want to provide measured, targeted and proportionate oversight to maintain high standards.

Introduction

I gave my first speech as deputy chief executive of the FCA at last year's Private Markets Summit.

The lights I talked about shining on private markets have become brighter than ever.

No longer waiting in the wings – you've taken centre stage in the UK's growth story.

UK private markets are approaching £1.2 trillion in assets under management.

They sit at the very heart of how we finance growth – and hold our place as the largest asset management hub in Europe.

The market continues to scale.

Fundraising reached £58.7 billion last year.

And private capital invested £25 billion into more than 1,400 UK businesses – more than half of which were outside London. 

You can see that momentum building in long-term asset funds (LTAF), too.

Ten firms currently manage LTAFs, with 15 umbrella LTAFs and 29 sub-funds between them. And six more have launched already this year. 

In less than a year, LTAF assets under management grew from £5 billion to £7.5 billion.

This is not a blip. It's a reflection of something deeper: 

Structural changes in how risk is managed, companies are financed and consumers channel their long-term savings.

That means more patient capital, broader financing options for companies looking to scale and greater diversity in how risk is allocated for investors.

But with spotlight comes scrutiny. And right now, private markets are being tested.

In these challenging times, I would venture to say that every one of you in this room is fielding some tough questions.

About market volatility. Global political uncertainty. And what recent events in overseas markets could mean for the wider outlook in the UK. 

These are the right conversations to be having.

But in moments like this, it's important to be transparent about what we are seeing.

Markets will be markets

Headlines are always a tough read when funds run into difficulty.

And lately, the language has been stark.

Some have even asked if private credit has a canary in the coal mine. 

That'll make you sit up a bit straighter, won't it?

But in this moment, it's important to remember that stress in markets is normal – and okay, as long as the system stays resilient. 

Private markets, done well, can support resilience.

But the range of things we need to plan for is wider than it once was, and the challenges are becoming increasingly uncertain. 

We know there will be situations where stress could be a problem. Those are the ones we need to plan for. Early, and together.

And with the entire system in mind.

That's why we are supporting the Bank of England's new system-wide exploratory scenario (SWES) focused on risk in private markets – so we can support a joined-up view of how these markets may function under stress.

I'm often asked whether conduct risks are important.

Let me be clear: while different to financial stability risks, they are no less important.

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.

You see this in our valuations work.

We know that robust valuation frameworks and processes are key to investor confidence and critical to market integrity. 

They are not there to eliminate judgement, but to ensure that judgement is robust, well evidenced and capable of standing up under pressure.

Our report, published in March 2025, set out expectations and good practice for governance in valuation processes. There's already been tangible change across the sector.

But 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.

Because in private markets, confidence is rarely lost when valuations change.

It's lost when they change without explanation, or too late.

We are taking the same approach in our multi-firm review of conflicts of interest, which is currently underway.

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. 

We need to train the spotlight on those places where standards may not hold under pressure.

Because in private markets, many problems can be traced back to first-line controls that have broken down – or appear to have done so.

We've seen this recently.

A major US private credit firm was forced to cap investor withdrawals after redemption requests worth billions came in within a single quarter.

It maintains that its underlying loans are sound and the mad dash for the exit was brought on by negative sentiment. Not reality.

That may well be true.

But the surge in withdrawal requests tells us something important.

When investors can't see clearly into a portfolio, they won't wait to find out what's there. 

The loss of confidence didn't happen because controls had visibly broken down. It happened because investors couldn't trust that they hadn't.

The question isn't whether there will be turbulence. There will be.

It's whether the system can handle it.

Which brings me to what I think truly matters: where confidence comes from. 

Because it doesn't come from ignoring risk, or pretending it simply isn't there.

Confidence

Instead, confidence comes from three key places.

One: Firms with strong first-line controls.

Ultimately, you are the first line of defence. Getting the basics right underpins the confidence of the entire ecosystem. 

Which means that your underwriting standards, operational resilience and valuations discipline matter more than ever. 

Because private markets aren't like others.

In most cases, they're long-term, bespoke and illiquid.

And that's the point. It's what makes them the right tool for funding long-term projects and infrastructure. 

But that can't be structured away – and problems arise when this isn't made clear.

So, design your products honestly. For what they are, not just how they sell.

Two: A sensible regulator that focuses on the risks that really matter – and does so calmly and proportionately.  

When I say proportionate, I mean that in every sense.

Including the way we design our rules and collect data, which allows us to take a smarter, more targeted approach – one focused on risk.

Later this year, the Treasury will consult on changes to the rules that govern alternative investment fund managers.

Alongside that, we'll be setting out proposals to regulate them more proportionately.

Because size matters when it comes to market integrity. 

We'll be more decisive in drawing the line: reducing obligations on smaller funds, while requiring what is needed from larger ones – proportionate to their size and impact. 

We don't want to do away with the existing framework. We want to improve it.

And make it more effective, better tailored to the UK market, and fit for the future. 

We want to do that with you. 

So, engage with us early – well before proposals are fixed – and tell us where our rules are getting in the way of good outcomes. 

Because our aim is not to eliminate risk altogether. 

It's to support markets and create the conditions where risk can be taken wisely. 

We are keeping standards high to build confidence in private markets so they can continue to grow, and investors can make informed decisions – and have a clear understanding of liquidity.

Connected markets, connected oversight

Thirdly, confidence comes from a well-connected system.

Connected markets call for joined-up oversight.

Which means we can't do any of this work alone.

And in the UK, we're not: I'm proud to say that the regulators genuinely work together.

Our participation in the Bank's Private Market SWES, which I mentioned earlier, is just one example.

It's not just about coordination at home, though.

Private markets are cross-border in nature, so regulation has to be internationally minded, too. 

That's why we work with partners across the world to share information, identify risks and build more consistent approaches.

We're putting that into practice through our work with IOSCO and the Financial Stability Board (FSB), both of which are looking at the growth of private markets – and the risks and opportunities that come with it. 

Including through the FSB working group on financial stability risks from leverage, which I'm proud to have co-led on last summer.

Last – but by no means least – we support global efforts to standardise the way we talk about private markets. 

Because when there are countless definitions of activities, it's difficult to know whether we're all talking about the same thing!

And that makes it harder to compare notes and share insights, and more burdensome for firms working across multiple jurisdictions. 

This kind of collaboration isn't a nice to have. It's a need to have.

Because confidence comes when we remove blind spots, improve consistency and spot the emerging issues before they take root.

Conclusion

Private markets are important to the UK's future.

And they deserve serious, proportionate oversight.

The lights are on. But let them make us sharper, not anxious. 

As regulator, our job is to stay alert. Clear-eyed. And focused on the standards that help drive confidence.

Your job is to keep the basics strong. Make your governance real. Engage with us on reform. 

If we both hold to that, private markets won't just withstand scrutiny as they grow – they'll earn confidence and they'll thrive.