The FCA published its 2026 wealth management survey on 18 August, and the sector it describes will be familiar to anyone who has bought a firm lately. The ten largest firms by client numbers now serve 89% of discretionary portfolio management clients, up 19% since the regulator’s first survey in 2022. Of the 400 firms that took part, 41% plan to acquire another firm, grow revenue, or grow their client base by more than 25% over the next two years. Another 18% are considering winding down or selling all or part of their client base.
Each of those transactions moves an entity from one group to another. For an FCA-regulated group, multi-entity consolidation means producing one underlying ledger more than one way: a statutory consolidation that goes to Companies House, a prudential consolidation that goes to the FCA, and a client money position that has to stay clear of both.
What Does Multi-Entity Consolidation Mean for an FCA-Regulated Firm?
Multi-entity consolidation combines the results and balances of separate legal entities into one set of figures, stripping intragroup balances and transactions back out. For an unregulated group that’s a single job with a single output. A regulated group runs it twice, under two different rulebooks, and holds a third set of numbers that never consolidates at all. That gap between the two entity lists is where most of the manual work in a regulated group’s reporting sits.
Why Do FCA-Regulated Groups Consolidate Twice?
Two readers are asking two different questions. Companies House wants a true and fair view of the statutory group. The FCA wants to know whether the group holds enough capital and liquidity against the risks it runs, which is a different question over a different set of entities.
The consolidation you file
Group accounts under Section 9 of FRS 102 cover the parent and the subsidiaries it controls. You eliminate intragroup balances and transactions in full, including income, expenses, and dividends, along with profits and losses from intragroup transactions sitting in assets. The ICAEW’s helpsheet on groups and consolidated accounts under FRS 102 sets out the mechanics. Control decides the scope: if the parent controls it, it consolidates. The output goes to Companies House once a year, where members and lenders read it.
The consolidation you report
If your firm is a MIFIDPRU investment firm, MIFIDPRU 2.5 builds a consolidated situation: the UK parent and its relevant financial undertakings, treated as though they were a single investment firm. The scope comes from a different test, it can take in connected undertakings a statutory consolidation leaves out, and participation can bring an entity in at the percentage held. Under MIFIDPRU 2.6, in defined circumstances, the group capital test replaces prudential consolidation with a narrower calculation. The numbers then reach the FCA through RegData on the MIF001 to MIF007 returns, and the FCA’s MIFIDPRU 9 guidance notes let a group complete MIF001 on a consolidated basis, listing the FRN of every regulated entity inside the consolidated situation. MIF007 covers the ICARA process.
Why the two scopes diverge
Entities arrive in a regulated group for reasons that have little to do with reporting: an appointed representative company, a non-regulated services entity, a holding company somebody put in for a debt raise, an offshore parent. Each lands in one scope, both, or neither. The FCA published a multi-firm review of consolidation in the financial advice and wealth management sector on 31 October 2025. It flagged offshore holding companies and dual-parent structures that narrow the scope of consolidation for otherwise highly integrated businesses. The FCA’s data quality review of prudential regulatory reporting by MIFIDPRU investment firms landed on 26 November 2025, running 323,000 tests over around 3,800 firms’ returns for January 2024 to March 2025. Around 60% of firms passed nearly all of those tests, and another 30% were making progress, with errors that weren’t persistent or systematic. Around 10% weren’t meeting their reporting requirements, most of their submissions carrying recurring errors. The FCA’s verdict on that band: “This shows fundamental weaknesses in those firms’ regulatory reporting systems and controls.” The same review states that the FCA regularly finds values in firms’ MIF007 returns that differ substantially from their ICARA documents.
What Makes Intercompany Eliminations Harder in a Regulated Group?
Three things, and none of them is the arithmetic. Intragroup services run constantly, ownership frequently stops short of 100%, and an elimination built for the statutory scope doesn’t answer for the prudential one.
Intragroup services run constantly
Management charges, shared compliance and finance functions, IT recharges, and introducer arrangements between group entities generate a steady flow of transactions with no external counterpart. All of it comes back out under FRS 102. Identification matters more than volume: entries between a regulated entity and a non-regulated one need to stay visible as themselves rather than netting quietly into a group total.
Partial ownership changes the arithmetic
Acquisitive groups rarely buy 100% of anything. Non-controlling interests, multi-level ownership chains, and second tranches completing mid-year mean eliminations have to run at the right level and in the right proportion, and the proportion carries a date. A workbook holds that as a hard-coded percentage somebody remembers to update. Sage Intacct holds it as an ownership period with a start date, so nobody has to remember.
One elimination, two scopes
An entity you eliminate out of the statutory group may still sit inside the consolidated situation, or outside it. The two lists were never built to match. That divergence is why the second consolidation is usually a manual rebuild rather than a second click.
“The spreadsheet knows one scope, and the other one lives in somebody’s head.”
Where Does Client Money Sit in a Consolidated View?
Outside it, and keeping it outside is the requirement. Firms that hold client money under CASS 7 hold it on statutory trust: legal title sits with the firm, beneficial ownership sits with the client, and it isn’t part of the firm’s estate if the firm fails. Segregation and separate reporting are the point of it, and no consolidation logic helps with either.
The reconciliation runs daily
CASS 7 requires an internal client money reconciliation every business day, and an external reconciliation against the bank’s records at least monthly. Daily means daily, with no month-end catch-up version. A ledger that treats a client money account as an ordinary bank account will give you the balance, but not the evidence that the balance was right on the Tuesday of the week before last.
The reports go to your supervisor
CASS medium and CASS large firms submit a CMAR to the FCA within 15 business days of each month end under SUP 16.14. Once a year, under SUP 3.10, the firm’s auditor delivers a client assets report directly to the FCA within four months of the end of the period it covers, with a schedule listing every CASS breach in that period. The direction of travel is the point. That report goes to your supervisor rather than your audit committee, and a supervisor can ask a follow-up question at any point in the year, on any figure, without waiting for a cycle to come round.
What Should a Finance System Do for an FCA-Regulated Group?
Produce all three views from one set of records, without a rebuild. That’s the specification: the statutory consolidation, the consolidated situation, the client money position, and a traceable line from any number on any of them back to the transaction underneath it. Sage Intacct holds the parts of that structure which otherwise end up in a workbook.
Entity and ownership structure held as data
Sage Intacct supports domestic, global, and advanced ownership consolidation, including multi-level ownership structures defined by period and non-controlling interest entities generated automatically, according to Sage’s consolidation documentation. Buy 60% of a firm in March and the holding stays 60% from March, with the system carrying the date. That removes the version-control problem every consolidation workbook carries around.
Eliminations you can open up
The system generates elimination entries at consolidation, and you can drill from a consolidated figure into the journals behind it. Working out how a number was built stops being a two-day exercise for the one person who knows the workbook. It’s the same property an audit trail gives you at transaction level, applied to the consolidation itself.
Three views, one ledger
Dimensions do the rest of the work: entity, ownership, and client money designation sit on the transaction record, so a report can read them straight off. The statutory group, the consolidated situation, and the client money position then become three reports off one set of records. Worth saying plainly, though: no software is FCA compliant, and none can be. Your firm holds the permission and signs the return. What a system can do is make the evidence behind that return reproducible on demand. We implement Sage Intacct for regulated groups and stay with them through the reporting cycles that test the structure.
What to Check Before Your Next MIF Return
Two checks, and both fit in an afternoon. Put your statutory group entity list beside the entity list in your consolidated situation, then mark every entity that appears on one and not the other. Each mismatch is a piece of manual work somebody is doing every period. Then take last quarter’s MIF001 and ask whether anyone could rebuild it from the ledger without opening a workbook, and how long that would take them.
Most groups find at least one number only one person knows how to construct. That dependence is a fair definition of the problem, and it puts a ceiling on financial agility: the reporting can’t move at the speed the group is moving. Acquisitions carry on regardless, and so do the return deadlines.
If this sounds familiar, booking a discovery session is a good place to start. Thirty minutes on whether your ledger can produce both consolidations and the client money position without a rebuild.
References
- FCA: Wealth management survey report – 2026, published 18 August 2026
- ICAEW: Groups and consolidated accounts under FRS 102
- FCA Handbook: MIFIDPRU 2.5 prudential consolidation and MIFIDPRU 2.6 group capital test
- FCA: MIFIDPRU 9 Annex 2G guidance notes, MIF001 consolidated basis of completion
- FCA: Multi-firm review of consolidation in the financial advice and wealth management sector, published 31 October 2025
- FCA: Prudential regulatory reporting by MIFIDPRU investment firms, data quality review, published 26 November 2025
- FCA Handbook: CASS 7.17 statutory trust
- FCA Handbook: CASS 7.15 records, accounts and reconciliations, and CASS 7.16 standard methods of internal client money reconciliation
- FCA Handbook: SUP 16.14 client money and asset return
- FCA Handbook: SUP 3.10 duties of auditors, notification and report on client assets
- Sage: Sage Intacct multi-currency financial consolidation
