The FCA is bracing itself for a number of firms to exit the market as a result of Covid-19.

Speaking as part of the Pimfa Virtual Fest conference, FCA director of supervision Megan Butler said the regulator cannot “duck the fact” that some firms may have to shut up shop.

But she warned in these circumstances it is “imperative to minimise any delay” in the return of clients’ money and custody assets.

The regulator will review financial positions of all firms to pinpoint those vulnerable to failure within its Covid-19 probe.

A survey is due to be sent to 13,000 regulated firms from today to assess the impact coronavirus has had on their business.

The first batch sent on 4 June require competition by 12 June, while the remainder will be issued 8 June with return required by 16 June.

Butler said: “We will review financial positions of all firms to identify those who are most vulnerable to failure, and ensure that they have appropriate plans in place to wind down in an orderly way, if that is necessary.

“Firms must maintain adequate arrangements to protect clients’ money and custody assets.

“The FCA will be writing to firms to remind them of their obligations.

“We’ve already seen the key impact of Covid-19 in a significant downward pressure on many firms’ revenues and we already know that declining market value means there is significant downward pressure on investment management fees incomes.”

She added: “Financial viability concerns already present in some firms will be amplified, and otherwise financially sound firms may become vulnerable.

“In the current climate we can not duck the fact, that some of these firms may exit from the market all together.”

Butler said: “The Preservation of clients assets and money is absolutely central to our focus in the wealth management sector.”

In her talk she said the FCA will assess how the wealth and advice market have reacted to the Covid-19 crisis, including how service and client propositions have changed.

All advisers and all wealth firms will receive the Covid-19 survey, Butler said.

“There are some sectors that are not receiving this because we have already extensive data and they are subject to CRD type requirement, so they are out of scope,” she added.