Selling a client bank is one of the few transactions where the regulator has taken the trouble to write down, in plain language, exactly what it expects. The FCA published a page setting out its expectations of firms selling client banks in December 2023 and updated it in January 2025. It is short, it is unambiguous, and it is the closest thing a seller has to a checklist from the regulator itself.
Most owners never read it, because most owners sell once. Buyers read it every time. That asymmetry matters: the buyer's lawyers will structure their due diligence around these expectations, and if your firm falls short on any of them, you will find out in the middle of a deal rather than before it. This article takes each expectation in turn and translates it into what you actually need to do as a seller.
The client bank is the firm's asset
The FCA's starting position is simple: the client bank belongs to the authorised firm. Not to the individual adviser who services the clients, not to a departed director, not to a network, unless there is documented proof otherwise. The regulator states that where anyone claims a third party owns the client bank, that claim needs evidence behind it. This matters because most sales are structured as a purchase of that asset rather than of the company's shares: asset purchases make up 62.5% of offers in the market (Gunner & Co), so the client bank moves to the buyer while the selling firm, and its regulatory history, stays where it is.
This sounds like a technicality until you consider how many advice firms actually operate. An adviser who joined you five years ago with "their own" clients may believe those clients are theirs to take or sell. A former partner may have left with an informal understanding about who owns what. An appointed representative may assume the client relationships sit with them rather than the principal. None of these beliefs settles anything. What settles it is paper: the adviser's contract, the AR agreement, the terms on which clients were introduced, and the client agreements themselves.
For a seller, the practical task is to establish clean ownership before a buyer starts asking. Pull the employment contracts and any restrictive covenants. Check the AR agreement if you operate through a network or have ARs of your own. If an adviser has a contractual claim to a segment of the client bank, resolve it, buy it out, or carve it out of the sale, but do it before heads of terms, not during due diligence. A buyer who discovers a contested ownership claim halfway through a deal will either reprice or walk. This is also one of the reasons data quality determines your price: a firm that can produce its client agreements and adviser contracts on request looks like a firm that owns what it is selling.
No selling with redress liabilities left behind
The second expectation carries the most weight, and the FCA's language is deliberately firm: it will act where client banks are sold with redress liabilities left behind. The pattern the regulator is targeting is well known in the sector. A firm with a complaints problem, or advice it knows may not stand up to scrutiny, sells its client bank, distributes the proceeds, and winds the company down. The clients get transferred; the liabilities get orphaned. When complaints later succeed, there is no firm left to pay, and the cost lands on the Financial Services Compensation Scheme, which is to say on every other firm in the industry.
If you are a legitimate seller, and the overwhelming majority are, this expectation still shapes your deal in two ways. First, it explains why buyers ask so many questions about your past advice. In an asset sale the liability for historic advice normally stays with your company, which is exactly the structure the FCA is watching. The buyer wants comfort that you are not selling to escape something, and the regulator wants comfort that the liabilities you retain are funded. The mechanics of who carries what are covered in detail in what happens to your liability for advice you have already given.
Second, it means the wind-down of your company after an asset sale cannot be an afterthought. If your company retains the advice liability, it needs the means to meet potential redress before you extract the proceeds and dissolve it. Distributing everything to shareholders on completion day, then striking the company off while complaints are still possible, is precisely the behaviour the expectations page exists to deter. Professional indemnity run-off cover is the standard answer, and what run-off cover costs and how long you need it is a question to price into your net proceeds from the start, not discover at the end.
FG20/1: adequate financial resources
The FCA ties the redress point to a specific piece of guidance: FG20/1, its framework on assessing adequate financial resources. The expectations page reminds selling firms that they must hold adequate financial resources for potential redress, and FG20/1 is the standard against which "adequate" is judged.
For a seller, FG20/1 does two jobs. Before the sale, it is the lens through which the FCA views your firm's capital position: not just whether you meet your minimum regulatory capital requirement, but whether your resources are adequate for the risks your business actually carries, including the risk that past advice generates future redress. After an asset sale, it is the standard applied to whatever remains of your company. A shell company holding retained liabilities, a run-off policy and a modest cash reserve will be judged on whether that combination is adequate for the redress exposure it has kept.
The practical translation: build a realistic view of your redress exposure before you sell. Look at your complaints history, your past business reviews, any product areas with known sector-wide problems, and the excess and limits on your professional indemnity cover. Then decide, with your accountant and ideally with the buyer's structure in view, how much needs to stay in the company and for how long. A seller who arrives with this analysis done controls the conversation. A seller who has never thought about it will have the buyer's number imposed on them, usually through warranties and indemnities and retention mechanisms that hold back part of the price.
SUP 15: telling the FCA about the sale
The fourth expectation is procedural but easy to get wrong. Under SUP 15 of the FCA Handbook, a firm must notify the regulator of matters that could affect its risk profile, value or resources. The expectations page makes clear that a client bank sale which could have that effect needs a SUP 15 notification.
Read that test carefully, because for most sellers it is met almost by definition. If you are selling the client bank that generates your recurring income, you are selling the thing that gives your firm most of its value, and the transaction plainly affects your risk profile and resources. The notification is not a request for permission in the way a change in control application is; it is telling the regulator something significant is happening. But failing to make it is a breach in its own right, and it is the kind of breach that surfaces at the worst possible moment, when the FCA reviews the transaction after the event or when your firm applies to cancel its permissions.
Timing matters here, and it interacts with deal confidentiality. You will want the notification made at the right point in the transaction, generally once the deal is sufficiently certain, and your compliance support or external consultant should own the drafting. If your sale is structured as a share sale rather than an asset sale, the regulatory process is different again: a change in control requires FCA approval under a separate regime before completion, which is one of the factors weighed in asset sale or share sale: the choice that changes everything. Either way, a buyer will expect the regulatory steps mapped before exchange, and the time a sale actually takes often has the regulatory timeline as its critical path.
Legitimate reasons: the regulator is not against you selling
It is worth stating what the expectations page is not. It is not a warning against selling. The FCA explicitly recognises legitimate reasons for selling a client bank, naming merger and retirement among them. The regulator's own multi-firm review of consolidation in the advice and wealth management sector, published on Fri 31st Oct 2025, took the same position at market level: consolidation can support efficiency and sustainable growth, provided integration is managed well and clients do not suffer for it.
So the honest reading of the expectations page is that it draws a line between two kinds of seller. On one side, the owner retiring after thirty years, merging with a neighbouring firm, or moving clients to a buyer better placed to serve them. On the other, the firm using a sale to detach itself from liabilities it created. Everything on the page is designed to catch the second seller, and everything a first-kind seller does to demonstrate good faith, clean ownership records, a funded run-off plan, a proper notification, works in their favour commercially as well as regulatorily.
What this means for your preparation
Pulling the threads together, the FCA's expectations convert into a short preparation list for any owner considering a client bank sale:
- Evidence of ownership: client agreements, adviser contracts and any AR agreements, reviewed for third-party claims and resolved before marketing the firm.
- A redress exposure assessment: complaints history, known risk areas and PI terms, turned into a view of what the retained company must hold under FG20/1.
- A funded run-off plan: cover and reserves sized to the exposure, priced into your expected net proceeds.
- A SUP 15 notification plan: who drafts it, when it goes, and how it fits the deal timetable.
- A clear, documentable reason for sale: retirement, merger or succession, stated consistently to the buyer and the regulator.
None of this is beyond a well-run firm, and most of it doubles as ordinary sale preparation: the same tidy records and honest liability assessment that satisfy the regulator also support your price. The firms that struggle with these expectations tend to be the ones that would struggle with due diligence anyway.
The expectations page is one of the few documents in this process written for you to read directly, and it takes ten minutes. Read it early, act on it early, and it becomes a list of things you have already done rather than a list of things a buyer finds missing. There is more on the wider liability picture across the liability and run-off section of this site.
And if you are weighing up whether a sale is worth pursuing at all, the free IFA valuation calculator will give you a range to react to, with the factors affecting it explained.