After months of speculation, the FCA has released its findings into its ongoing advice service review, with the key takeaway that suitability reviews were delivered in the ‘vast majority’ – 83% of cases. The analysed data provided by 22 of the largest financial advice firms also reported that a further 15% of reviews were either declined or the client did not respond.

Simon Walls, interim Executive Director 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. 

Whilst the headlines brought positive news to the financial advice sector, it is important that firms react proactively to the report as it does provide a call to action. It took the FCA many months to release the results of its work, which indicates that they were not fully satisfied with the findings.

Work firms should prioritise now include:

Examine the FCA’s findings, assess compliance, and act accordingly 

Whilst the headline figures are positive, circa 2% of clients were not offered a review service that they were paying for. The FCA has strongly indicated that redress should be payable to these clients. So, firms need to identify these clients and consider what level of redress is appropriate

TCC considers there to be ongoing risks arising from incorrect management information (MI) whereby advisers attest to reviews which do not marry reasonable client quality expectations and indeed where the content of client contact would not meet the criteria of a review at all. We also note the FCA did not comment on the need to demonstrate qualitative aspects of the reviews. Firms should also determine what is ‘reasonable effort’ for client reach out and if it has been met.

Disengage clients who are not engaging with the ongoing service  

The FCA has said that redress is less likely to be needed where a client has consciously declined a review numerous times. However, it has said firms should consider if an ongoing review service is in these client’s best interest if they are not engaging. Consequently, it is essential for firms to pinpoint areas where client engagement is lacking and implement a suitable disengagement strategy to prevent any potential customer harm  Similarly, it needs to consider what period of time is appropriate before pro-actively disengaging and the amount (if any) of charges taken that it should refund.

Check you are providing good ongoing advice to clients

The quality of advice was not the main area of focus for the FCA’s work. However, the regulator has confirmed the importance of ongoing advice in wealth management firm’s business models. It is crucial that checks are made on the quality of ongoing advice provided to clients. If firms are not doing this already, they should ensure that ongoing advice reviews are a central part of their business assurance models. TCC’s work on the Consumer Duty including feedback at our industry forums demonstrates that price and value continue to be a challenge.

Get ready for FCA’s planned work and your Consumer Duty board report 

The FCA has said it will be undertaking further work later this year to assess how firms have responded to the issues it has identified, and it will review the associated actions that firms have taken. Therefore, it is important that firms consider if the suitability reviews they deliver are suitable, with the appropriate evidence ready should the FCA ask for it

One of the key components of such work is obtaining management information (MI) on clients who have not been offered a service that they have been paying for and clients who have not been engaging in the process. Based on the FCA’s communication, we recommend that firms go back to January 2018 for this analysis.

Similarly, firms need to be able to challenge the accuracy and integrity of MI avoiding over reliance on any tick box process.

This MI is not just for the FCA. It is important that Consumer Duty MI is included in the next Consumer Duty board report your firm drafts.

Ensure current processes are compliant 

The FCA has stated: “Firms should consider our findings and whether they can evidence that they have delivered all the services they were required to deliver, as set out in their contracts or as required by our rules. Consideration should include whether it would be appropriate for them to proactively contact customers to assess if any harm was caused as a result of any identified problems or failings. ”

It’s vital that firms review their existing ongoing advice processes to ensure they are helping to deliver good customer outcomes.  This means reviewing client agreements and ongoing advice processes to ensure that they are aligned. Firms also need to go back, check and update their fair value assessment for ongoing advice, to satisfy themselves that their ongoing advice service provides value for clients.

Get independent advice

Engaging independent expertise is a prudent step that firms can undertake now. Although it may seem that the immediate pressure has eased, the situation is more complex. Providers of ongoing advice must demonstrate that annual client reviews have been conducted consistently since 2018, supported by appropriate documentation

TCC experts will be undertaking two industry round tables in March 2025 to provide firms with the opportunity to discuss their views on the content of the FCA communication. We will address some of the pressing questions which may not have been captured within the shared update.

TCC’s regulatory specialists are actively collaborating with wealth management firms to ensure compliance and facilitate this process. Our team of trusted experts offer bespoke compliance solutions including:

• Objective analysis and strategic advice
• Practical, value-focused outsourcing solutions for projects of all sizes
• Strategic resourcing to help scale up your talent at short notice

Contact us today to discover how we can assist your firm in achieving and evidencing consistent reviews for your clients.