These welcome proposals should also represent the end of the FCA’s ongoing services review (although some firms will have to carry on with remedial work) and the final step in the development of alternative forms of advice along the spectrum from information and guidance, through (the newly introduced) targeted support, to regulated investment advice, including ongoing advisory services. The FCA even produced a handy visual aid to explain how it views the spectrum of advice services. See page 7 (Figure 1) of CP26/10: Simplifying the Pensions and Investment Advice Rules
Providing firms with “more confidence to use the flexibility that already exists within our rules and guidance” is a consistent message throughout the consultation, along with a renewed emphasis on ensuring consumers receive what they have actually paid for.
Both aims sit behind the wider FCA objective of “an advice market that offers different types of support to meet differing consumer needs, at a cost they can afford, so they can make informed decisions to meet their financial objectives”. There’s never been a better time to review your firm’s advice proposition.
“Consolidate, simplify and reframe the advice rules”
The FCA frames consolidation of the advice rules as a means of enabling firms to unlock greater flexibility. Concerns that the existing framework has encouraged firms to design standardised advice propositions are not new. The FCA acknowledges again that “uncertainty about our rules and concerns about potential liabilities have limited the development of simpler advice propositions”. In our March 2025 article , we noted the risk that firms could find themselves forced to “build their business models solely with the rules in mind”, rather than designing propositions around consumer need, value and engagement, particularly if (as seemed to be happening during its ongoing services review) the various ongoing adviser charging and periodic suitability assessment rules were being conflated by the FCA.
COBS 9C
You wait for a COBS 9 reform and then two come along at once. We will soon move from COBS 9 and 9A, for non-MIFID and MIFID business respectively, to COBS 9B for the new targeted support rules and COBS 9C for all investment advice. The consultation’s proposals to ‘consolidate, simplify and reframe’ the advice rules represent an important recalibration, rather than a substantive change in standards. As the FCA describes them, the changes may be small, but the ambition is not. The proposals do not seek to introduce new obligations; instead, they aim to clarify existing expectations so that firms can design and deliver more tailored advice propositions with greater confidence. The proposed consolidation of COBS 9 and COBS 9A into a single, unified chapter (COBS 9C) exemplifies this approach. Having transferred the MIFID Organisational Regulation from legislation into the rules, the FCA is now free to tailor the rules to the UK market. By removing the distinctions between MiFID and non MiFID business, insurance based investment products and other life policies, the FCA intends to reduce regulatory complexity and enable firms to “innovate and offer new services”. A Brexit dividend?!
Ongoing adviser charges
The FCA proposes to refine COBS 6.1A.22 to draw a clearer distinction between ongoing service charges for a genuine service providing personal recommendations or ‘related services’ and instalment payments used to spread the cost of one off advice. Under the proposed approach, firms will be able to charge for ongoing services related to their advice whether or not they give a new personal recommendation. Where an adviser charge relates solely to initial advice, any ongoing payments must cease once that advice has been fully paid for. Ongoing charges, by contrast, can only continue where there is an ongoing service to justify them, in line with the Consumer Duty.
The message is a familiar one, but expressed with greater clarity; reducing the scope for instalments to masquerade as ongoing fees and reflecting the wider market pressure to reduce the cost of advice and expand access to support for consumers with simpler needs, without diluting regulatory protections.
Periodic suitability assessments
The FCA’s most headline-grabbing proposal is to relax the annual suitability review obligation. Currently, where a firm provides periodic suitability assessments as part of its ongoing advice services, it must review the suitability of investments previously recommended to the client at least once a year (COBS 9A.3.9). In its consultation, the FCA proposes to replace the annual suitability assessment requirement with “periodic suitability assessments” (as now), but with the frequency of those reviews to be determined by “the client’s needs and circumstances”, in line with the Consumer Duty, rather than by a prescribed maximum annual timetable.
This marks a clear shift away from the implicit assumption (adopted by many firms, in part due to the approach of FCA supervisors and the FOS) that suitability reviews must involve a ‘face-to-face’, annual review meeting, regardless of the scope of the service provided. The proposals confirm our previous understanding of the regime and reduce pressure on firms to conduct ‘tick box’ annual reviews simply to satisfy a prescriptive rule. However, as we have mentioned previously, the client agreement remains ‘one of the three legs’ of any firm’s ongoing advice service ‘stool’, and any change to the frequency of reviews will need to be considered alongside what a firm has contractually committed to provide and, in particular, how suitability reviews are delivered over time.
Disengaged clients
Disengaged clients and any fee refund policies will also need to be re-visited. The consultation addresses the recurring practical difficulty of dealing with disengaged clients. As we discussed in March 2025, there has been ongoing debate about ‘periods of grace’: How long can a firm continue to charge where a client is unresponsive to review requests, despite the firm being willing and able to provide the service? The FCA’s proposals do not impose a fixed time limit, but they do signal a clear expectation that firms should have a considered and documented approach to disengagement. It will be for firms to consider whether to move clients onto a different service level or proposition, or terminate them altogether, perhaps by way of a sale of their smaller client book.
The dreaded ‘R-word’ – refund – is only mentioned once; in reference to good and bad practice guidance the FCA is offering the industry about “how firms determine whether ongoing fees should continue, be stopped, or refunded, including any criteria or decision frameworks that are commonly applied”.
Consumer Duty
The FCA aims to streamline the existing framework in large part by leaning more heavily on the Consumer Duty. The consultation recognises that the Duty “already requires firms to act in good faith, avoid causing foreseeable harm and support retail customers to pursue their financial objectives”, making several detailed provisions in COBS 9 and 9A unnecessary. Specifically, the FCA plans to remove COBS 9A.2.19R, which mandates firms to assess whether alternative products might better meet a client’s profile, and COBS 9A.2.20R, which prohibits recommending unsuitable products.
The requirement to assess a client’s knowledge and experience before making a recommendation will also be amended to clarify that such an assessment may not be necessary where the target market for simple (presumably low risk) products is novice, inexperienced investors. And the FCA proposes to clarify that assessing attitude to risk does not require complex psychometric tools or detailed questionnaires. Similarly, a more proportionate approach will be allowed to determining capacity for, or ability to bear, losses as part of the assessment of the client’s financial situation.
Another key proposal is the reframing of the suitability assessment standard, shifting the emphasis from firms collecting “necessary” information to gathering “sufficient” information when providing investment advice or portfolio management services (COBS 9A.2.1) This change is designed to encourage a more proportionate, risk-based approach to advice, particularly where the scope of that advice is limited. However, what amounts to ‘sufficient’ information is inherently judgement-based. Whilst this change may create more flexibility in theory, it could shift the evidential burden for firms to ‘after the event’. As ever, the approach to complaints by the FOS will be a key test of the new regime.
As Churchill might have said, firms must take the time to write shorter, more proportionate and focused suitability reports. The FCA will consolidate the rules on the timing and content of reports to facilitate this.
Conclusion
Although this consultation has ‘simplifying’ in the title, the final piece of the Advice Guidance Boundary review jigsaw – the proposed simplified advice rules – will likely now take the form of further clarification of the advice / guidance boundary, with the much-derided FG 17/18 (and its confusing attempt to explain over-lapping terms like ‘streamlined’, ‘focused’ and ‘simplified’ advice) retired, to be replaced with case studies and further clarification promised by the FCA.
We have heard many times these promises to move from prescriptive rules to more outcomes-focused, proportionate and risk-based regulation. In these proposals, the FCA is delivering on that promise.
This presents a rare opportunity for firms to review their advice propositions and there is still no better place to start than the applicable rules – as revised – and the client facing documents, particularly the client agreement. Let us know if we can help.
How prepared is your firm to respond to these changes? Now is the moment to reflect, review and refine your approach.
Many thanks to Ellen Murphy for contributing to this article.
