The UK Financial Conduct Authority (FCA) has warned that governance arrangements at some fast-growing financial firms have failed to keep pace with expansion, exposing weaknesses in oversight and risk management.

A review published by the authority this week highlights a key message for firms pursuing rapid growth: governance, risk management and oversight arrangements must evolve alongside expansion to avoid operational weaknesses, poor decision-making and potential consumer harm.

The timing of the review is notable. While the FCA is pressing ahead with reforms designed to make the UK a more attractive place for firms to start, scale and list, it is also reminding firms that growth can create vulnerabilities if appropriate controls are not established. The review therefore illustrates a broader challenge for regulators and firms alike: supporting growth and competitiveness without creating gaps in accountability, risk management and investor confidence.

Governance’s key position in growth

Strong governance is one of the cornerstones flagged by the FCA’s review published this week of good practice and areas for improvement identified through its Early and High Growth Oversight pilot with high-growth firms. The authority engaged with 15 firms across asset management, wealth management and payments between July 2025 and March 2026. The review is intended to be used by authorised firms that are newly established, experiencing rapid growth and/or undergoing significant change.

In its section on governance and senior management oversight, the FCA said firms with stronger arrangements had ensured governance, risk management and control frameworks remained appropriate as their businesses expanded. The review added that these firms had clear Board and Committee structures, defined roles and responsibilities, regular oversight of risk and compliance matters and high-quality management information to support decision-making, while also strengthening governing bodies as they grew.

However, the FCA stated that the governance arrangements of some firms had "not kept pace with business growth". This included shortcomings in the scope, frequency and format of meetings, a lack of sufficient independent challenge and flaws in governance record-keeping.

"Growing firms may benefit from revisiting governance and oversight arrangements to ensure they remain effective," the FCA stated. "Firms with strong governance, risk management and oversight arrangements are often better equipped to manage the challenges associated with rapid growth."

The review also included examples of good practice and areas for improvement in risk management frameworks. One area highlighted was some firms failing to consider adequately whether risk management resources remained appropriate for the scale and complexity of the business, including as they made greater use of technologies such as AI.

"High-growth firms play a vital role in driving economic growth across the UK," said Jessica Rusu, chief data information and innovation officer at the FCA. "We want the UK to remain one of the best places in the world to start, grow and scale a financial services business."

UK IPOs and the pursuit of growth

The review arrives at a time when the FCA is pursuing a broader agenda aimed at supporting growth and competitiveness across UK financial markets. That objective is perhaps most visible in the regulator's recent efforts to make London a more attractive destination for IPOs, where questions of governance and shareholder oversight have become increasingly prominent.

Just last week, the authority moved to simplify IPO rules, which it said would enable the UK listings market to "compete more effectively with global markets". The reforms sought to reduce execution risk for issuers, lower compliance costs and make it easier for companies to access public markets. They also eliminated the seven-day waiting period for connected research during an IPO. The changes followed a consultation that closed on 29 May 2026.

"We want the UK market to be an attractive place for companies to raise capital and grow," said Jon Relleen, director of infrastructure and exchanges at the FCA.

Several countries, most prominently the US under Securities and Exchange Commission Chair Paul Atkins' "Make IPOs Great Again" campaign, are racing to establish themselves as leading venues for IPOs, with the UK among those jurisdictions. Some commentators have suggested this trend risks favouring companies over shareholders and could weaken investor rights.

The FCA previously overhauled its listing rules in 2024 with the objective of "boost[ing] growth and innovation" on UK stock markets while bringing the UK's regime closer to international market standards. The revised rules removed the need for votes on significant or related-party transactions and offered companies greater flexibility around enhanced voting rights.

Investor takeaways

Taken together, the FCA's latest review and its wider market reforms reveal the balancing act facing regulators. Efforts to attract more high-growth companies and IPOs are being accompanied by reminders that governance, oversight and accountability remain fundamental to sustainable expansion. For investors, the debate is whether initiatives designed to promote growth are gradually outpacing protections that support effective oversight and shareholder confidence.