On 13 October 2025, the Financial Conduct Authority (FCA) published a Final Notice in respect of BlueCrest Capital Management (UK) LLP (BCMUK), imposing a censure and a requirement to pay redress of $101 million to non-US investors for failing to manage fairly a conflict of interest created by its role in managing both a fund exclusively for the benefit of partners and employees and a fund available to external investors.
Key takeaways
Key takeaways are set out directly below, but for more details on the findings see our ‘Notice in a Nutshell’ table beneath these:
Conflict management: Recognising and recording a conflict is not the same as managing it. Once a potential conflict is identified it should be managed by those who are independent of the conflict. Controls which rely on senior individuals doing the right thing may not be sufficient to achieve compliance and satisfy the regulator.
Disclosures: Disclosures for the purpose of managing conflicts need to be proactive, clear and not omit any material information which would impact the decision-making of third parties who may be impacted. Consider carefully a disclosure strategy which involves providing information only reactively. Remember that internal materials regarding how to deal with customer queries may be disclosable to regulators in the event of an investigation.
Attestations: Attestations are a useful regulatory tool that can subsequently be used to hold firms and individuals to account. Attestations to the regulator should be carefully considered and supported by adequate internal governance arrangements such as internal reviews and verification by those in possession of all the relevant information. Additional resource may be needed to ensure compliance can be evidenced to the regulator if necessary.
Single-firm redress scheme: As confirmed by the Court of Appeal, the FCA can use its power to impose requirements to compel a firm to pay redress to customers (in addition to its powers to impose an industry-wide redress scheme under section 404 of the Financial Services and Markets Act 2000 (FSMA)). This decision is an example of how this works in practice. The Redress Scheme Rules are included in a Schedule to the requirement and include provisions regarding the identification of investors and calculation of redress. The costs of administering the redress scheme must be borne by BCMUK and the firm must provide the FCA with quarterly written progress updates.
Key information
Decision maker | FCA Settlement Decision Makers |
Firm | BlueCrest Capital Management (UK) LLP, a fund manager |
Related decisions | BCMUK had referred a Decision Notice to the Upper Tribunal and appealed an Upper Tribunal decision to the Court of Appeal (see our summary and the judgment) |
Sanction |
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Provisions |
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Relevant period | 1 October 2011 to 31 December 2015 (over 4 years) |
Factual findings | BCMUK was a sub-investment manager which was involved in decisions concerning the allocation of capital and portfolio managers for two funds: (i) an ‘External Fund’ open to outside investors; and (ii) an ‘Internal Fund’ open only to BlueCrest partners and employees. Over the Relevant Period, BCMUK’s management approved decisions to reallocate a significant number of portfolio managers from the External Fund to the Internal Fund in which they personally invested. At the same time, a significant amount of the External Fund’s capital was allocated to a semi-automated computer trading system called RMT which sought to track the performance of the Internal Fund but sometimes performed less well. Although BCMUK recognised the conflict and reference to it was made in a conflict of interest register, BCMUK’s primary control for managing the conflict was that allocation decisions were made by senior individuals who had a regulatory and fiduciary duty to serve the interests of the funds and their investors. Compliance was not aware of who was exposed to the Internal Fund and its focus was on ensuring portfolio managers with a split allocation between the funds were not incentivised to trade more for the Internal Fund. Limited and sometimes misleading disclosures were made to investors regarding the allocations of portfolio managers and capital and the conflict. By way of example, a Q&A document stated that information regarding allocations should only be disclosed reactively in response to investor queries and discussion of how RMT worked should be avoided. References were made to the positive contribution of the RMT despite historic losses. The External Fund prospectus referred to potential conflicts of interest when a conflict had already arisen; did not reference the Internal Fund until 2015 and did not disclose that allocation decisions were made by investors in it. From 2013 the prospectus stated that the investment manager had no obligation to ensure fair treatment of investors (which did not negate the regulatory obligations owed to investors by BCMUK). In February 2013, BCMUK attested to the FCA that its arrangements were sufficient to ensure that conflicts of interest were managed effectively. An external article in 2014 expressed concerns about the Internal Fund and conflicts but BCMUK still did not tell the External Fund investors about the conflict relating to the allocation of portfolio managers. |
Failings | Despite decisions concerning the allocation of portfolio managers to the Internal Fund being made exclusively by those invested in it (and who had greater exposure to it than the External Fund), BCMUK did not manage the risk that the interests of investors in the Internal Fund would be favoured over those in the External Fund. Steps were not taken to consider whether the exposure of senior staff to the Internal Fund presented its own conflict or whether BCMUK’s executive committee was sufficiently independent to be able to manage the conflicts or to manage the conflict by providing sufficient disclosure to investors. BCMUK’s failure appropriately to manage the conflict of interest arising from its role in ratifying the allocation of portfolio managers resulted in a sub-standard service being provided to investors and breached Principle 8. |
Related content
View all the other “Notices in a nutshell.”
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