Understanding & implementing the FCA’s ongoing advice findings

What happened?

The FCA has published the results of its review into ongoing advice services, several months after the work concluded. Simon Walls, interim Executive Director at the FCA, described ongoing advice and support as valuable to consumers, but the regulator also identified specific shortcomings that firms need to address.

Around 2% of clients who were paying for a review service did not receive one. The FCA has indicated that redress is likely to be appropriate for these clients, and firms are expected to identify who they are and determine a suitable level of redress.

The regulator has also said it will return to this area later in the year to assess how firms have responded, and will expect firms to produce management information covering clients who have not been offered a paid-for service and clients who are not engaging with it.

Why does it matter?

The delay between the FCA completing its work and publishing the findings suggests the regulator was not entirely satisfied with what it found. That, combined with the planned follow-up work, means this is not a subject firms can treat as closed.

Firms need to be able to evidence, not simply assert, that ongoing advice services have been delivered as set out in client agreements. The FCA has also indicated that fair value assessments for ongoing advice should be revisited to confirm they still hold up.

Who is affected?

The findings apply to wealth management and financial advice firms that operate a paid-for ongoing advice or review service, and to the advisers and support staff responsible for delivering and recording those reviews.

Clients who have been paying for a review service but have not received one, and clients who have stopped engaging with the service, are the two groups the FCA has specifically highlighted.

Key risks

• Clients being charged for a review service that was not delivered, creating a redress liability.
• Management information that records a review as complete when the underlying contact would not meet the criteria for one.
• No clear or consistently applied policy for disengaging clients who repeatedly decline reviews.
• Fair value assessments for ongoing advice that have not been revisited since the Consumer Duty came into force.

Actions to take

1. Identify clients, back to January 2018, who were paying for a review service but did not receive one, and assess the redress due.
2. Review management information to confirm it accurately reflects whether a review has taken place and meets a reasonable standard of client contact.
3. Set out, and apply consistently, a policy for disengaging clients who are not engaging with the ongoing service, including any charge refunds.
4. Revisit the fair value assessment for the ongoing advice service in light of the findings.
5. Prepare evidence of consistent annual client reviews since 2018, ready to share with the FCA if requested.

Wider implications

The FCA has said this review activity will feed into future work assessing how firms have responded, so the findings should be treated as a starting point rather than a one-off exercise. Firms should expect scrutiny of their response to continue through the year.

The regulator has also confirmed that this analysis should be reflected in the firm’s Consumer Duty board report, linking ongoing advice directly to the wider Consumer Duty governance firms already have in place.

Recommendations

Firms should treat the findings as a call to action rather than a closed matter. That means checking client agreements against what has actually been delivered, correcting management information practices, and being ready to demonstrate compliance with clear evidence.

Given the scope of the analysis required, and the sensitivity of any redress decisions, independent input can help firms test their approach before the FCA returns to this area later in the year.