Laying the Foundation for Confidence

Why It Matters

By tightening valuation standards and addressing conduct risk, the Investment Association aims to protect investor confidence and reduce systemic fragility in private markets, a sector increasingly central to institutional portfolios.

Key Takeaways

• IA backs Bank of England’s private‑market stress scenario.
• New valuation governance guidelines released March 2025, driving sector change.
• Multi‑firm conflict‑of‑interest review to publish findings later this year.
• US private‑credit firm capped withdrawals after billions in redemption requests.
• Conduct risk focus aims to protect investor confidence and market integrity.

Pulse Analysis

Private‑market stress has moved from headline‑grabbing anomalies to a strategic focus for regulators and industry bodies. At the IA Private Markets Summit, Sarah Pritchard highlighted the Bank of England’s System‑Wide Exploratory Scenario, a forward‑looking stress test that maps how credit, real‑estate and infrastructure funds might behave under macro‑economic shocks. By collaborating on this scenario, the Investment Association is helping to create a common language for risk, ensuring that liquidity squeezes or valuation swings do not cascade into broader financial instability.

A core pillar of the IA’s agenda is conduct risk, particularly around valuation transparency and conflicts of interest. The association’s March 2025 valuation report set out clear expectations for governance, evidence‑based judgement and timely communication—principles that have already prompted measurable changes across fund managers. Simultaneously, a multi‑firm review of conflict‑of‑interest frameworks is underway, with findings slated for release later this year. These initiatives aim to align incentives with long‑term investor outcomes, reinforcing market integrity and reducing the likelihood of opaque decision‑making that can trigger panic.

The urgency of these efforts is illustrated by a recent episode where a major US private‑credit firm halted investor withdrawals after redemption requests totaling billions of dollars surged in a single quarter. While the underlying loan portfolio remained sound, the firm’s inability to provide clear, timely insight eroded confidence and forced a protective cap. Such incidents underscore that confidence hinges not on the absence of risk but on the robustness of first‑line controls and transparent communication. By institutionalising stress testing, valuation standards, and conflict oversight, the IA is positioning private markets to absorb turbulence without compromising the trust of institutional investors.