The probe will form part of the FCA's larger conflicts policy framework, under which the financial watchdog requires appropriate controls to be in place.
While former Wealth Manager cover star Chris Macdonald (pictured) described the decision to make sure conflicts are managed as a 'sensible piece of work', he told Wealth Manager he felt the profession does not have much to fear.
'For ourselves, in-house funds are a very small part of our proposition, so it’s not a major issue.
'As long as it’s quite clear in people’s investment propositions what their stance is, and that its well explained, and the fee rates are correct then I don’t see it as an enormous issue. If it’s not [transparent], then clearly it is an issue.'
Macdonald hinted wealth management firms who use their in-house funds under an opaque film could suffer from the FCA's probe and would have to consider changing their propositions.
The news was revealed in the financial watchdog's annual review, with the regulator concerned that there may be conflicts of interest at work.
'We will assess how wealth managers and private banks effectively control the conflicts of interest that arise when client assets are invested in in-house investments,' the FCA said.