How can firms keep their ongoing advice services compliant?

What happened?

In the final part of this compliance Q&A, Garry and David address the actions financial advice firms must take following the FCA’s thematic review of ongoing advice services. David highlights that with the regulator’s findings now published, there are no excuses for non-compliance going forward.

David outlines a dual approach: a forward-looking review of current policies and a backward-looking audit of historical service delivery dating back to 2018.

Why does it matter?

With approximately 90% of advice clients on ongoing service agreements, ensuring and demonstrating good customer outcomes is a regulatory necessity under Consumer Duty. Reviewing client agreements to match promised services against actual delivery is essential to pass fair value assessments.

Equally critical is the backward-looking piece. Firms must identify clients who have paid fees but were not invited to reviews or chose not to engage, and take corrective action including potential fee redress and disengagement.

Who is affected?

This affects financial advisers, wealth management firms, and compliance teams managing ongoing advisory contracts and recurring fee structures.

Key risks

• Service Delivery Gap: Charging ongoing fees without delivering the promised annual reviews, violating Consumer Duty fair value rules.
• Unmanaged Disengaged Clients: Allowing clients who do not engage to continue paying for ongoing services without formal disengagement.
• Historical Exposure: Unaddressed legacy issues since 2018 where client service was not delivered, risking severe FCA enforcement.

Actions to take

1. Review Current Agreements: Verify that forward-looking customer agreements, fair value assessments, and disengagement policies are fully compliant.
2. Audit Historical Files: Review client files back to 2018 to identify where promised reviews did not occur.
3. Implement Redress or Disengagement: Provide fee redress where services were not delivered, and formally disengage chronically unresponsive clients.

Wider implications

The thematic review indicates that the FCA expects advice firms to have high operational standards. Passive collection of ongoing fees without active verification of service delivery will be met with swift regulatory action.

Recommendations

Firms should integrate robust audit tools and client tracking systems to ensure no annual reviews are missed, and build automated disengagement triggers for uncooperative clients.