CP26/10 offers firms greater flexibility in how they deliver advice. In this opinion-based piece, Elly Dowding and Lee Coates OBE, directors at In Accord and the Accord Initiative discuss that for paraplanners, client understanding and suitability evidence is now even more important.
The FCA’s recent CP26/10 consultation proposes some of the most significant changes to advice processes in recent years.
Much of the discussion has focused on simplification, proportionate advice and reducing unnecessary regulatory burden. Those developments are likely to be welcomed by advisers and paraplanners alike.
However, simplification should not be confused with reducing the quality of client understanding.
For paraplanners, that distinction is important.
The consultation proposes a shift away from gathering exhaustive information in every case towards collecting information that is sufficient to demonstrate suitability.
In practice, that should allow firms to design more proportionate advice journeys based on the complexity of the recommendation and the needs of the client.
The challenge is determining what “sufficient” looks like.
Paraplanners are often responsible for translating fact-find information into suitability rationales.
That means understanding not only the client’s financial objectives, risk profile and capacity for loss, but also the factors that influenced the recommendation itself.
Where client preferences have influenced fund selection, portfolio construction or investment strategy, the suitability rationale should make that clear.
Equally, where those preferences were discussed and determined not to be relevant, the file should demonstrate that conclusion rather than rely on an assumption.
This becomes increasingly important as advice processes become more streamlined. The shorter the journey, the greater the need for clear evidence that the right conversations took place.
The FCA’s proposals on suitability reports are also relevant. Concise, consumer-focused reporting should be a positive development for the profession. Long reports have never guaranteed better client understanding.
For paraplanners, however, shorter reports place greater emphasis on the quality of the underlying suitability reasoning. If a recommendation reflects specific client preferences, those considerations should remain visible within the rationale supporting the advice.
The consultation also highlights the growing importance of Consumer Duty. Much of the industry’s focus has been on communications, fair value and foreseeable harm. Increasingly, however, the central theme appears to be client understanding.
That raises an important question: can firms evidence that clients were given the opportunity to express the preferences and objectives that matter to them?
As advice models continue to evolve, paraplanners will play a key role in answering that question.
The profession has always been strongest when technical analysis is combined with a genuine understanding of the client. CP26/10 does not change that principle. If anything, it reinforces it.
The opportunity presented by simplification is not to collect less information. It is to become more deliberate about identifying the information that genuinely matters to suitability.
That remains the foundation of good advice, regardless of how streamlined the process becomes.
These themes are explored in more depth in a recent Accord Talks podcast episode.
In Accord and the Accord Initiative, provide free-to-access education, resources, and compliance support to the financial advice sector.
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