How to Run an Investment Manager (Without Ending Up in the FCA’s Naughty Book)

A guide to governance committees for UK-regulated investment firms

The Basics

So, you’ve got your shiny FCA authorisation to operate as an investment manager. Congratulations – you’re now regulated, responsible, and suddenly facing more internal committees than your average village fête.

While the FCA doesn’t mandate a one-size-fits-all governance structure, it does expect you to know who’s doing what, why they’re doing it, and how they’re being kept in check. Most firms set up a suite of committees to oversee their core functions – partly because it’s sensible, and partly to avoid getting a stern letter from the regulator.

Here’s what you need to know.

Meet the Committees: Who They Are and Why They Matter

Board of Directors

Status: Legally required (no wriggle room here).
Job: The grown-ups in the room. They set strategy, sign off major decisions, and make sure the firm doesn’t steer off a regulatory cliff.

Key duties:

• Approving business plans and budgets
• Appointing senior staff and reviewing key contracts
• Overseeing compliance and risk frameworks
• Meeting quarterly (or more) and generally keeping a watchful eye on everything

Executive Committee (ExCo)

Status: Not compulsory, but highly advisable if you want to sleep at night.
Job: They run the place day to day. Think of them as air traffic control, making sure investment, ops, compliance, finance and the rest don’t crash into each other.

Key duties:

• Tracking performance against key goals (KPI’s – measurable targets like revenue or client growth)
• Handling ops, onboarding, staffing and provider issues
• Making day-to-day decisions within delegated authority
• Frequency varies – monthly or biweekly is typical, unless things are on fire, in which case, more often.

Investment Committee

Status: Strongly recommended if you’re managing money (which, let’s face it, you probably are).
Job: Keeps investment decisions sensible, structured and, crucially, justifiable if the FCA comes knocking.

Key duties:

• Approving how money is invested across different asset types (shares, bonds, cash etc.)
• Reviewing investment performance and key risks
• Considering new asset classes or counterparties
• Signing off any requests to go outside the usual investment rules or limits set by clients or internal policy

Risk Committee

Status: Optional, but the ICARA gods will smile upon you.
Job: Ensures someone is constantly thinking about what could go wrong – and how to stop it from doing so.

Key duties:

• Monitoring market, credit, liquidity and operational risks
• Keeping an eye on key risk indicators
• Overseeing stress tests and the ICARA process (that’s the FCA’s Internal Capital and Risk Assessment regime – basically “have you got enough capital and a good grasp on what might go wrong?”)
• Making sure business continuity isn’t just sitting on a top shelf in a dusty ring binder

Smaller firms often fold these responsibilities into the Board – just make sure someone’s doing the job.

Compliance Committee

Status: Not required, but helpful – especially under MiFID and SM&CR.
Job: Tracks the ever-shifting sands of FCA regulation and keeps the firm on the right side of them.

Key duties:

• Monitoring compliance with obligations such as:
  • MiFID – the Markets in Financial Instruments Directive (rules about how you operate and treat clients)
  • AML – Anti-Money Laundering (making sure you’re not accidentally harbouring the proceeds of dodgy dealings)
  • and SM&CR – the Senior Managers and Certification Regime (which makes sure there’s a clearly accountable grown-up for every major function)
• Reviewing rule breaches, compliance incidents, and regulatory filings
• Keeping internal policies up to date as regulations change
• Organising staff training and collecting necessary sign-offs and certifications
• Providing a central place to raise and resolve compliance concerns

 Audit Committee

Status: Typical for larger firms or those with external investors.
Job: Makes sure the financial numbers are what they say on the tin – and that no one’s helping themselves to the biscuit tin.

Key duties:

• Reviewing financial statements and liaising with auditors
• Overseeing internal controls and financial crime procedures
• Looking after whistleblowing arrangements
• Making sure someone’s checking the checker

In smaller firms, this can be handled by the Board or bundled with the Risk Committee.

Remuneration Committee

Status: Required if your firm is subject to MIFIDPRU pay disclosure rules (that’s the FCA’s rulebook on how investment firms manage capital, risk and pay).
Job: Ensures bonuses don’t reward recklessness and that pay aligns with good behaviour (no golden handshakes for bad apples here).

Key duties:

• Approving how the firm sets and reviews pay, especially for senior staff
• Deciding on bonuses and how they’re paid (including any deferrals)
• Applying rules like clawback (where bonuses can be taken back if things go wrong) and proportionality (bigger roles = tougher rules)
• Checking that pay practices are fair, risk-aware, and support a healthy culture

Where it’s not required, the Board can pick up the slack – as long as it’s documented.

CASS Oversight Committee

Status: Required if you hold client money or custody assets.
Job: Protecting client assets like a hawk. The FCA loves this one – and will absolutely be watching.

Key duties:

• Checking that client money and investments are correctly kept separate from the firm’s own accounts
• Fixing any issues if the numbers don’t match or something’s gone wrong
• Keeping internal processes and controls up to scratch, in line with CASS (that’s the FCA’s Client Assets rulebook – the one that says “don’t touch what isn’t yours”)
• Maintaining clear records and making sure everything is ready for the annual CASS audit – including the so-called “Resolution Pack” (a sort of emergency handbook explaining how to return client money if the firm fails)

If your firm is subject to the CASS rules, this committee isn’t a nice-to-have – it’s a regulatory must-have, and one the FCA will have its eye on.

Committee Summary – Quick Reference Table

Still awake? Bravo. For future reference (or for those forwarding this to their compliance team with a “Can you check we have all these?”), here’s a handy table summing up each committee’s purpose and whether it’s strictly necessary.

Committee	Status	What it Actually Does
Board	Legally required	Strategy, oversight, accountability
Executive Committee	Strongly recommended	Day-to-day ops, coordination and escalation
Investment Committee	Strongly recommended	Approves and monitors investment decisions
Risk Committee	Best practice	Identifies and manages business and investment risk
Compliance Committee	Best practice	Keeps you in line with the FCA (and your own policies)
Audit Committee	Optional	Financial controls, audits and internal checks
Remuneration Committee	Required (if MIFIDPRU applies)	Aligns pay with performance and regulatory rules
CASS Committee	Required (if applicable)	Safeguards client assets and ensures CASS compliance

The Last Word

Good governance isn’t just about ticking boxes – it’s about making sure your investment firm works. Having the right committees in place ensures responsibilities are clear, decisions are tracked, and risks are managed.

And yes, it may feel like you’re building a small bureaucracy – but when the FCA comes knocking, you’ll be quietly glad you did – especially when the FCA asks to see the minutes.