Governance and independence – rethinking oversight in a consolidating market

For many financial advisers, the authorised corporate director (ACD) sits quietly in the background of the funds they recommend. Yet they perform one of the most important governance roles in the UK fund ecosystem.

It’s a complex bundle of tasks. They are responsible for oversight, maintaining regulatory compliance and ensuring funds are managed in the best interests of investors. In practice, that means monitoring liquidity risk, challenging value for money and ensuring fund managers meet regulatory obligations.

When an adviser recommends a fund, that adviser is depending on two things. First, that the fund manager is as skilled as their brand literature says they are. Second, that the ACD will act as an independent governance engine protecting investors if something goes wrong.

But the ACD landscape is changing. Consolidation, private equity investment and evolving regulatory expectations are reshaping how these governance providers operate. The question is this: what does the future of ACD oversight look like, and what does it mean for the funds and clients they support?

The evolving role of the ACD

In the UK funds market, the ACD is legally responsible for the operation of the fund. While the investment manager runs the portfolio, the ACD ensures the fund is administered correctly and managed in line with regulatory expectations. This includes overseeing fund operations, monitoring liquidity management, ensuring fair treatment of investors and conducting the annual Assessment of Value required by the Financial Conduct Authority.

The governance expectations placed on ACDs have increased significantly over the past decade. Regulatory scrutiny intensified following periods of market stress that exposed liquidity risks within certain fund structures.

When UK open-ended property funds were suspended after the Brexit vote, and then suspended again during the pandemic, many fund managers quickly became appreciative of the need for robust liquidity management. These episodes highlighted the role governance bodies play in protecting investors when market conditions deteriorate.

More recently, the introduction of Consumer Duty has further raised expectations around investor outcomes. ACDs now play a central role in scrutinising whether funds continue to deliver fair value for investors.

Taken together, these developments have strengthened the ACD’s position as a key governance engine within the funds landscape.

A consolidating market

Alongside rising regulatory expectations, the structure of the ACD market itself is changing. Over the past decade the sector has experienced increasing consolidation, as governance providers have merged or been integrated into broader fund services platforms.

In private markets, for example, nearly 46% of all private equity capital raised in 2025 was secured by the ten largest funds, up from 34.5% the year before, according to PitchBook. As capital concentrates, service providers across the investment ecosystem are also combining to support increasingly complex fund structures.

Within the ACD market, several notable transactions illustrate this trend and as governance providers become part of larger fund services groups, the operating model around governance oversight is also changing.

One consequence is that the number of independent governance providers is gradually narrowing, raising questions about diversity of oversight models and the independence of governance functions.

When governance providers integrate multiple platforms and client bases, decision-making may become more centralised and access to senior leadership less direct. Service responsiveness can also change as organisations oversee growing numbers of funds and clients. In some cases, governance functions become more closely integrated with administration platforms or rely more heavily on outsourced services, introducing additional layers between governance oversight and day-to-day fund operations.

Changing ACD providers can also be complex. Governance structures, regulatory approvals and operational processes are closely intertwined, meaning transitions can be time-consuming and operationally demanding once a fund structure is established. These practical exit barriers mean governance relationships tend to remain in place for long periods.

For advisers, the key issue is not consolidation itself but understanding how these structural changes affect governance culture and oversight quality on a wider level.

What consolidation means for fund managers

Changes in the ACD landscape can also affect how asset managers operate, launch products and interact with regulators. Where the number of providers narrows and platforms become larger, some asset managers may find their choice of governance partner more limited than in the past. This can affect the process of launching new funds.

In the past, a smaller boutique asset manager might have worked closely with a governance provider to structure and launch a new strategy relatively quickly. In a more consolidated market, launch timelines may be influenced by standardised processes or internal capacity constraints within large platforms.

For example, a manager seeking to launch a new Undertakings for Collective Investment in Transferable Securities (UCITS) strategy who may need to work within the operational framework of the ACD platform they partner with. That could include standardised documentation, approval processes or operational structures. None of this is inherently negative. Standardisation can support consistency and regulatory rigour, but it can also reduce agility. This can influence how quickly strategies reach the market or how easily existing funds adapt to regulatory change.

When regulatory updates occur, such as new disclosure requirements or governance rules, ACD platforms play a key role in implementing those changes across their client base. Where platforms oversee hundreds of funds, implementing changes across the entire book can take time. Over the long term, these dynamics can shape the investment ecosystem available to advisers and their clients.

Why governance matters for advisers

For advisers, governance may not always be the most visible part of the investment process. Performance, asset allocation and portfolio construction typically take centre stage. Yet the governance framework supporting a fund plays a crucial role in protecting investor outcomes.

ACDs are responsible for challenging fund managers where necessary, particularly around issues such as fees, performance and operational practice. Under the FCA’s Assessment of Value framework, ACDs must scrutinise whether funds continue to deliver fair value for investors. This scrutiny has already led to fee reductions and fund mergers in parts of the industry where value for money has been questioned.

Liquidity oversight is another critical responsibility. Events such as the suspension of UK open-ended property funds during periods of market stress have highlighted the importance of robust governance around liquidity risk. Operational resilience has also become a major focus. As global markets move towards T+1 settlement cycles, where securities trades settle one business day after they are executed rather than two, operational processes supporting funds must operate more quickly and reliably.

Weak governance oversight in any of these areas can lead to operational disruption, regulatory scrutiny or reputational damage. For advisers, these issues may only become visible when problems arise. When governance failures occur, advisers may find themselves explaining operational or regulatory issues to clients. Strong governance oversight therefore acts as a protective layer across the entire investment chain.

Independence in a changing market

As consolidation reshapes the ACD market, the concept of independence is attracting greater attention.

While consolidation can reshape the structure of governance providers, effective oversight ultimately depends on the ability of an ACD to exercise independent judgement. That includes challenging fund managers where necessary — whether on liquidity management, value for money or operational practices.

Ownership structure can influence how that oversight operates. Governance providers that sit within larger financial groups or private equity portfolios may operate under different commercial incentives or strategic priorities.

By contrast, independently owned governance providers may prioritise long-term stability and continuity of oversight. They may also offer closer engagement with senior leadership and a governance culture that emphasises accountability and judgement.

For advisers and asset managers alike, independence is not simply a structural question, it is about whether governance bodies have the authority and willingness to challenge when required.

What advisers should be asking

As the ACD market evolves, governance considerations may become increasingly relevant within advisers’ due diligence processes. While advisers are not responsible for selecting an ACD directly, they are recommending funds that rely on these governance frameworks. This makes it increasingly useful to understand the oversight structures behind the products clients hold.

Understanding the structure and culture of the governance provider behind a fund can therefore provide useful context. Questions advisers may increasingly consider include who owns the ACD, how stable the leadership team is and what regulatory track record the firm has established. They may also want to understand how conflicts are managed, whether oversight is genuinely independent and how operational functions are structured.

Some governance providers rely heavily on outsourced service providers, while others maintain more in-house operational capability and each model carries different operational dynamics and potential risks. These factors can help advisers assess the strength and independence of the governance framework supporting a fund.

Why advisers should pay more attention to who is overseeing the funds

For financial advisers, the ACD landscape may not always sit at the forefront of investment decision-making. Yet the governance framework supporting funds is becoming increasingly important as regulation tightens and operational complexity grows.

Consolidation within the sector is unlikely to slow soon and private equity investment and strategic acquisitions will continue to reshape the competitive landscape. At the same time, regulatory scrutiny of governance and investor outcomes will continue to bite.

For advisers, this evolving environment reinforces the importance of understanding the broader ecosystem behind the funds they recommend. Ultimately, the ACD’s role remains the same: to act as an independent guardian of investor interests.

But as the industry changes, the structure, incentives and operating models of the organisations providing that oversight may also shift. Keeping sight of that governance layer can help advisers ensure the funds they recommend are supported by robust, stable and effective oversight — something that benefits advisers, fund managers and, most importantly, their clients.

This article first appeared in FT Adviser on the 27^th April 2026

What does the future of ACD oversight look like? – FTAdviser