The Financial Conduct Authority has found that the vast majority of advisers are delivering suitability reviews.
In its review of ongoing advice, the regulator said it found suitability reviews were delivered in 83% of cases. In a further 15% of cases, the FCA was told that clients either declined or did not respond to the firm’s offer of a review.
However, there were 2% of cases where firms had made no effort to deliver the suitability review to clients.
In February 2024, the FCA asked 22 of the largest financial advice firms to provide data on their delivery of ongoing services. It had expressed concern that these services may not always have been delivered where they had been offered.
Simon Walls, interim executive director of markets at the FCA, said: “Ongoing financial advice and support can be a fantastic service and can be important in helping people make the most of their money. Relationships between advisers and customers can last many years and can take different forms.
“In the vast majority of the cases we looked at, firms delivered ongoing advice for their customers. But, in a small number of cases, they haven’t attempted to provide the services they offered and customers are paying for. In those instances, they will need to put that right.”
The FCA is asking all advice firms to review its findings and consider whether they have met their regulatory requirements and contractual obligations regarding ongoing services.
The rules on ongoing services were introduced more than a decade ago, during which time consumer needs and expectations, technology, and market practices have continued to change. Going forwards, the FCA said it will review the regulatory approach for these services.
Walls added: “The FCA will also review the rules on ongoing advice to make sure they remain fit for the future and help as many people as possible to get good support in managing their financial lives.”
Commenting on the findings, Chris Jones, Chief Product Officer, Dynamic Planner said: “The spectre of the FCA’s Review of ongoing advice has been looming since early December with various levels of expected severity and impact. The advice industry and its advice and service offered is vital, it is encouraging that the FCA’s findings did not harm it.
“Whilst this can be seen as a positive for the industry, they are also delivering on their consumer protection obligations, and simply putting the responsibility where it belongs on the advice firms themselves. We expect there to be further data requests for the Financial Advice portfolio before the summer and where they have set out Good Practice in terms of systems, record keeping and what constitutes an acceptable suitability review you would be wise to meet those standards before then, whoever you are.
“We know that any firm can put that in place before then because our technology is available to them. Many of the 22 largest firms that delivered suitability reviews to 83% use Dynamic Planner to deliver the FCA’s stated best practice suitability, efficiently in a way that provides value to the end customer.
“The obligation to take appropriate action and where necessary, pay redress to clients who have suffered foreseeable harm – in this case paid for something and not received it – as a result of acts or omissions falls upon the firm. The fact that they are making it your responsibility doesn’t mean that you don’t still have to do it.
“There are also positives in the wider work; the advice boundary review and review of the existing rules. From a Consumer Duty perspective why should a client have to have a suitability assessment once in every 12 months if they don’t want it, or the lifestyle or affordability don’t make it practical. The Good Practice has agreements and disclosure that are clear on the nature and timing of services to meet the understanding outcome, I could see a review of IDD and other disclosure requirements as a result. Whether it is this, the needs of an increasing digital population, or the redress paid to clients that didn’t get your current service; it may be time to expand or reinvent your advice and service proposition.”
