Growth without control is not growth – why firms must scale resources and systems and controls in line with commercial aspiration

Our October Compliance Clinic will focus on FCA expectations around recruitment and ongoing supervision, particularly for firms with or firms looking to add Appointed Representatives (ARs).

Book your place on our next clinic here.

Growth is the ambition of almost every business - new clients, increased revenue, expanded advisory teams and wider market opportunities are all signs of success. Yet for regulated firms, growth brings a challenge that is often underestimated - ensuring that governance, supervision and systems and controls evolve at the same pace as the business itself. 

Quite often firms focus on commercial expansion, organic or acquisitional, while assuming that the frameworks which supported them at a smaller scale will continue to be sufficient as the organisation grows. In reality, this growth can expose weaknesses that were previously well managed. Processes that worked effectively with a handful of advisers can quickly become stretched when the business, and the activity being managed, doubles in size. Supervisory arrangements that once provided appropriate oversight can become stretched and inadequate as activity levels increase. 

The question for businesses is not whether growth creates risk, that’s a fact, the real question is whether firms are aware of and actively managing those risks by increasing key non-financial resources and strengthening controls alongside expansion plans. 

One thing is clear, regulatory reporting requirements and an increase in advisers on the FCA Directory will mean that data is available and growth within a firm will certainly not go unnoticed by the regulator. 

Compliance should enable growth, not restrict it 

There remains a misconception in some organisations that compliance is a barrier to commercial success. In our experience, the opposite is true. 

Well-designed systems and controls enable firms to grow with confidence. They provide clear frameworks for decision-making, support good customer outcomes, help educate staff and create consistency across the business. Importantly, they allow firms to identify and manage emerging risks before those risks crystallise into regulatory, operational or reputational problems. 

When compliance is embedded within the day-to-day operation of a business, rather than treated as an afterthought, it becomes a driver of sustainable growth. Firms that invest early in robust governance and oversight are often better positioned to seize opportunities because they understand their risk profile and have confidence in their ability to manage it. 

The risk of growing faster than your controls 

One of the most common challenges facing expanding firms is a growing mismatch between increasing business activity and available internal resource to support. 

As adviser numbers increase, so does the volume of business being written, customer interactions, recommendations made, number of ongoing suitability reviews required, competency assessments, file reviews, management information requests and regulatory oversight requirements. The demands placed on supervisory and compliance functions can increase significantly, often without firms fully recognising the impact.  This stretches the span of control. 

When managers are responsible for supervising too many individuals, systems start to creak - warning signs can be missed, file reviews may be delayed, monitoring activity may fall behind, management information may become less reliable, and training and competence oversight can weaken.  In many cases, issues only become apparent after customer detriment has occurred or regulatory concerns have been identified. 

The reality is that an increase in advisers and increase in business activity requires greater support and supervisory resource.  

Firms should regularly ask themselves: 

• Are our supervisory structures still appropriate for the size of the business? 
• Are client reviews being completed on time? 
• Are we up to date with adviser supervision? 
• Is our management information providing meaningful oversight? 
• Have we increased compliance and risk resources in line with growth? 
• Are we able to demonstrate that we are meeting our regulatory obligations? 

If the answer to any of these questions is unclear, it may be time to undertake a review. 

Growth demands more than financial investment 

When discussing growth, firms often focus on capital, revenue and profitability.  It is important however to also consider non-financial resources as well. 

A firm's ability to manage risk depends on having sufficient people, expertise, governance structures and operational support. As business models become more complex, firms should expect to invest in enhanced oversight capabilities, better reporting, improved risk management frameworks and stronger operational resilience arrangements. 

Business plans should not simply project financial growth. They should also identify the additional resources and controls required to support that growth safely. 

Senior Managers would be well advised to revisit their original business plans periodically and ask whether current arrangements remain aligned to the firm's size, scale and complexity - what was suitable three years ago may no longer be appropriate today! 

A Timely Reminder from the FCA 

Recent feedback from the Financial Conduct Authority following their ‘High-growth firms pilot review’, published in August 2026, highlights this issue.  The FCA reviewed a group of rapidly growing firms and identified a recurring theme: business models were evolving more quickly than governance, risk management and control frameworks, with the regulator encouraging firms to assess whether their arrangements remained appropriate for their size, scale and complexity. 

The FCA identified a number of examples of good practice, including firms that: 

• Maintained clear risk appetites and key risk indicators. 
• Ensured boards had a diverse mix of skills and experience. 
• Delayed expansion into new regulated activities until existing control frameworks were sufficiently robust. 
• Tested their resilience and ability to operate during periods of stress. 

Equally important were the areas the FCA highlighted for improvement. These included over-reliance on key individuals, governance arrangements lacking effective challenge, risk frameworks failing to keep pace with changing business models, outdated management information, weaknesses in operational resilience and insufficient monitoring of consumer outcomes. 

While the review focused on a particular group of firms, the lessons are very relevant across the sector. Growth introduces complexity, and complexity demands stronger governance. 

Systems and Controls should never be static 

Firms often ask us when the right time is to review their systems and controls, I would counter that by asking if there was ever a wrong time to do this? 

An old compliance saying is that the only constant with regulation is the amount of change, and that remains true. The regulatory environment continues to evolve and so do the risks facing firms. New products, technology, third party arrangements, cyber threats and changing customer expectations all have the potential to alter a firm's risk profile.  A control framework that was effective twelve months ago may no longer provide the same level of protection today. 

Rather than viewing internal reviews as periodic compliance exercises, we believe that it would be more beneficial for firms to adopt a mindset of continuous assessment and improvement.  Systems and controls should evolve alongside the business, ensuring they remain proportionate, effective and aligned with regulatory expectations. 

Creating long-term value 

Strong systems and controls are not just about avoiding regulatory issues. They can create long-term business value. 

Effective governance supports better decision-making, robust controls reduce operational risk and consistent customer outcomes reduce complaints and strengthen reputation. Importantly, firms that can demonstrate a culture of compliance and well-embedded controls are often more attractive to investors, acquirers and strategic partners. Any responsible buyer will examine a firm's governance and control environment as part of its due diligence process. 

Ultimately, sustainable growth is not measured solely by how quickly a firm expands. It is also measured by how effectively it manages the risks that accompany that expansion. 

The most successful firms recognise that growth and control are not competing priorities. They are two sides of the same coin. By keeping resources, supervision and robust systems and controls under continual review, firms can pursue growth opportunities with confidence while continuing to meet their regulatory responsibilities and deliver good outcomes for customers.

Our October Compliance Clinic will focus on FCA expectations around recruitment and ongoing supervision, particularly for firms with or firms looking to add Appointed Representatives (ARs).

Book your place on our next clinic here.