Compliance Matters: Week ending 20th February 2026

Here is a digest of issues that have come across my desk this week.  Where relevant, I have provided high-level summaries with hyperlinks to documents that give further detail. 

• The FCA’s Review of the Products & Services Outcome

• Advisers should consider business protection as part of duty of care

• The rebirth of Insurance Bonds

The FCA’s Review of the Products & Services Outcome

The consultancy S&W Partners has published a review of the Products & Services Outcome of the Consumer Duty.  As a reminder, the FCA has made clear that firms must evidence that their products genuinely meet the needs of well-defined target markets and avoid foreseeable harm.  This expectation sits alongside the regulator’s wider programme to simplify rules, reduce burden, and drive more consistent standards across sectors.

As an IFA, we should anticipate a higher evidential bar across all components of product governance.  The FCA expects documentation, testing, and monitoring must go beyond compliance to demonstrate how decisions support consumer outcomes.  We will need to demonstrate that our distribution strategies match the intended target market.

The minutes of Investment Committee meetings along with MI derived from Intelligent Office will assist in producing evidence of how we support our clients achieve their financial goals and objectives.  Client files will demonstrate how we support our clients understanding of the products and services we recommend.

Advisers should consider business protection as part of duty of care

Another week, another article about protection.  Zanele Sibanda, Head of Business Development at the broker Everywhen suggests that advisers have a duty of care to consider business protection when talking to their clients about their needs.  She says, “advisers tend to shy away from business protection because of the complexity of the practice.”  But she argues that this perceived complexity is largely unfounded as the fundamentals of business protection are the same as the fundamentals of personal protection - as in it pays out on death, critical illness, and inability to work.  The difference is that it is arranged and paid for by the business and the benefits are primarily for the business.

We have clients who are business owners, we should be discussing how they are protecting themselves and their key people.  Many insurers will accept a Group Life Scheme with only two members, this could be the spouses who are your clients that own the business.

The rebirth of Insurance Bonds?

Advisers are taking insurance bonds off the back shelf, dusting them down, and putting them front and centre in the financial services shop window.  But what or who is behind the resurgence of this long-neglected product, and could it really be the new/old tool of the day to help advisers keep clients' tax bills down?

The 2024 Budget caused some of the most disruptive tax changes the advice market has seen in recent memory; making unused pensions subject to inheritance tax (IHT) from April 2027 and significantly hiking CGT, with the lower rate rising from 10% to 18%, and the higher rate from 20% to 24%, aligning them with residential property rates.  Measures requiring advisers, in many cases, to start again with building retirement strategies for clients.

Re-enter onshore bonds; a tax-efficient, non-income producing investment wrapper (technically a life insurance policy) designed for medium-to-long-term investing, particularly for higher-rate taxpayers, trust planning, and IHT mitigation.  It shelters gains from CGT, allows 5% tax-deferred withdrawals annually, and provides a 20% tax credit on gains, making it highly effective for tax planning. 

In an article in Professional Adviser, one of the contributors is quoted as saying "Onshore bonds are an incredibly useful tool for providing an investment vehicle that can provide flexible retirement income and intergenerational wealth planning."  She went on to say they provide "an excellent opportunity for managing client money, especially where clients may be additional rate taxpayers now but lower rate later in life.”

Platforms are starting to allow onshore bonds, which, together with Trusts enables advisors to present bonds as part of a joined-up financial planning strategy.  There are, in effect, three main factors driving the momentum behind the moves in the onshore bond market; successive squeezes on tax allowances have made financial planning harder; the 2027 pension and inheritance tax reforms have created a new sense of urgency; and advisers are placing greater value on operational simplicity.

The recent activity in the onshore bond market reflects a much wider shift in the tax and pensions landscape, which is forcing advisers to rethink wrapper choice more fundamentally.  Many higher-net-worth clients have already maximised pensions and ISAs, advisers are now looking for structures that can sit alongside those wrappers and offer tax deferral, flexibility, and estate planning functionality. Onshore bonds fit.

Onshore or offshore?  An article in Citywire suggests that there has been a surge in offshore bonds for the same reasons as cited above but with the advantages of gross roll-up but the disadvantages of currency or jurisdiction risk, they would not be covered by FSCS and perceived complexity.

The articles can be read in full here (Professional Adviser) and  here (Citywire).