Private market growth under the spotlight in the Lords
The House of Lords Financial Services Regulation Committee has launched an inquiry into the growth of private markets, a subject that has attracted wide interest in the media and across the financial sector. For the BVCA and its members, it offers an opportunity to understand and influence how Parliament is assessing changes in market structure, the distribution of risk across the system, and the contribution private capital makes to the UK economy. The committee is expected to publish a final report with recommendations next year, and its conclusions will help inform future policy thinking.
At its core, the inquiry is examining whether the long-term shift from bank lending to non-bank finance has altered financial stability risks, and whether the Bank of England’s existing regulatory perimeter (including prudential standards and capital requirements) remains appropriate. Evidence has been broad ranging. Some witnesses have pointed to potential vulnerabilities within parts of private markets and the risk of stress transmitting to insurers or banks. Others have highlighted the strength, diversity and economic value of private capital, noting that private markets now play a central role in funding growth, innovation and scale-up activity across the UK.
The BVCA has contributed written evidence to ensure the committee has a clear picture of the scale and value of private capital investment in the UK, the robust risk management and governance practices of private capital firms and the structural features of private capital funds that mitigate systemic risk. BVCA Chief Executive Michael Moore also gave oral evidence on 18 October, joined by representatives from member firms who provided insight into investment practices, governance, transparency and the sector’s long-term support for UK businesses.
Speaking alongside Joseph Pinto, Chief Executive Officer of Asset Management at M&G, Michael described how private capital is a national success story, attracting investment into British businesses and helping build a more resilient economy. He emphasised that private equity and private credit are long-term, partnership-based models, typically using closed-ended funds and with multi-year investment horizons that provide committed capital and avoid liquidity mismatches. In response to questions about the growth in private credit since 2008, Michael noted the attractiveness of the industry’s tailored and more flexible approach to equity and credit investment.
The Committee also heard evidence from representatives of leading private credit firms. Blair Jacobson, Partner and Co-President of Ares Management Corporation and Daniel Leiter, Senior Managing Director at Blackstone Credit and Insurance gave excellent accounts of their respective organisations, emphasising how the private credit model does not pose systemic risk.
In a separate hearing, the committee heard from the Economic Secretary to the Treasury Lucy Rigby MP, who appeared alongside HM Treasury officials. During the session, the Minister said that the regulators remit letters, which are published alongside the Budget, would “include reference to overseeing the risks in private markets.” She declined to go into detail ahead of the publication of the letters, but suggested that the letter would look at the interconnectedness of private markets and the transparency of the industry, which is something already being scrutinised by the Bank of England. Overall, the Minister and officials stressed that the regulators, such as the FCA, PRA and FPC, are actively monitoring potential risks arising from private markets.
As expected, the Bank of England has been an important voice in this inquiry. Its written and oral evidence brings the regulator’s perspective on private markets and financial stability, and the tone has evolved noticeably over the past year. Compared with speeches and commentary around the time of the July 2024 Financial Stability Report, the latest evidence session and recent remarks from Governor Andrew Bailey and Executive Director Nathanael Benjamin strike a more balanced note. Both acknowledged areas where better data could support supervision, while also emphasising the important role private capital plays in supporting both equity and credit investment.
This shift has not happened in isolation. As private capital has grown, scrutiny has increased, and so too has the BVCA’s proactive engagement with policymakers. Over the past eighteen months, the BVCA has worked closely with the Bank to build a detailed understanding of how private capital firms operate, how risk is managed, and how capital is deployed into UK companies. That engagement has made a material difference. The Bank’s public commentary now reflects a much fuller appreciation of the sector’s role within the financial system and the wider economy.
The strengthened relationship was evident again this week at the BVCA’s Technical Policy Conference 2025, where Lee Foulger, Director of Financial Stability Strategy & Risk at the Bank, joined Michael Moore on stage for an in-depth discussion on the 2026 private markets stress test. His willingness to speak directly with the industry underlines the progress being made in deepening dialogue, understanding and trust.
For BVCA members, the inquiry and the Bank’s recent contributions point to a policy landscape that continues to evolve. Scrutiny will remain, and the final report from the Lords committee will add another important and influential voice to the debate. But there is now clearer recognition of the value private capital brings to the UK economy, supported by sustained BVCA engagement on behalf of the industry.
Authored by Nick Chipperfield,
Senior Policy Manager, BVCA