Compliance Matters: Week ending 27th March 2026

Here is a summary of regulatory activity this week. 

• Simplifying the Pensions & Investment Advice Rules

• FCA sets out next phase of smarter, more effective regulation

• A more open, approachable regulator?

Simplifying the Pensions & Investment Advice Rules

At the Consumer Duty Alliance Conference on Tuesday, the representatives from the FCA trailed the publication of Consultation Paper CP26/10.  The press release summarises the consultation.  The consultation simplifies the suitability chapters COBS 9 and COBS 9A to a single Suitability chapter (to be called COBS 9C) and removes the distinctions between MiFID and non-MiFID advice.  The rules around annual reviews have been clarified to give advisers the ability to tailor their service to the individual client.  We can extend the client review to two or three years, but we will need to alter our fee proposition to suit.  Our client disengagement process already fits the proposed new rule.

What the FCA has actually done is raise the bar.  The old rule was simple: review every client, every year.  Tick the box.  The new expectation under Consumer Duty is harder: demonstrate that every client receiving an ongoing service is getting value proportionate to what they are paying.  Periodic, needs-based, and evidenced.

The line that we should focus on is that the consultation explicitly states that firms must stop charging ongoing fees where value is not being delivered.  That means where we collect fees from lower-value clients we barely contact, we should cease receiving these fees.

The question is not whether you need to conduct annual reviews, the question is: can we prove we deliver ongoing value to every client we charge?

In respect of client reviews, the FCA explained that rather than conduct reviews each year, firms providing ongoing advice would instead be expected to carry out periodic suitability assessments.  It would be up to the adviser to determine how often they conduct these reviews “based on an assessment of customer needs and circumstances, and in keeping with the Consumer Duty.”  By doing this the FCA believes it will give firms more flexibility to design its ongoing advice services that meet a wider range of consumer needs, which would complement simplified advice.

The regulator said while it recognised the importance of a regular suitability review to make sure clients’ advice remains appropriate for their needs, objectives, and risk tolerance, it may be many clients did not need this check-in each year.  Reducing the frequency would also lower the cost of advice.

The FCA set out several reasons as to why removing mandatory annual reviews could help the profession and clients:

• Varying consumer needs: for some, especially those with simpler, low-risk investments, less frequent reviews might be a better fit to their needs.

• Reduced consumer costs: a more flexible review model could lower costs for consumers who may otherwise be priced out of ongoing services while also freeing up adviser capacity.

• Ensuring fair value: under the Consumer Duty, firms must be able to show evidence that the services they charge for provide fair value.  This reduces the need for prescriptive rules setting out a minimum frequency for the suitability review.

The CP has four chapters covering the proposed new rules and guidance, it refers to the Consumer Duty as the basis for simplification putting the onus on firms to demonstrate how their systems and controls deliver good outcomes for our clients.  The chapters are headed:

1        Summary

2        Simplifying the advice rules

3        Ongoing advice services

4        Discussion chapter: reviewing our rules on commission payments

5        Discussion chapter: professional client suitability standards

The consultation closes on 22^nd May, following which the final rules will be published thereafter.  I will review our Compliance Manual, policies, and procedures in light of the provisions of the Consultation and highlight the changes as they arise.

FCA sets out next phase of smarter, more effective regulation

Highlighted in a news release, the FCA has published its annual work programme for 2026/27.  The news release highlights four areas:

• A smarter, more efficient, and effective regulator: the programme outlines major initiatives to simplify processes, remove friction where appropriate, and help firms operate more efficiently, while ensuring high standards are maintained across the financial sector.

• Supporting growth, helping consumers, and fighting financial crime.

• Consulting on fees and levies.

• Publication of the perimeter report for 2026/27 setting out the most significant issues at the edge of the FCA’s remit, including where legislative change may be needed to better protect consumers, markets and support sustained economic growth. 

A more open, approachable regulator?

Last Tuesday, I attended a conference run by the Consumer Duty Alliance in conjunction with the FCA.  Having the voice and the ear of the regulator for a whole day is some people’s idea of a bad day out!.  It is actually very valuable.  Here are some of the highlights.

In a speech entitled “A New Era of Regulation” Sarah Woodfoffe (Head of Consumer Investments at the FCA) stated the FCA would act with more proportionality and be more predictable.  She also said there would be more of a focus towards smaller focus to give them (and therefore us) more examples of good practice seen across the profession. 

The FCA discussed best practice in preventing foreseeable harm in the advice process.  The examples included:

• Poor and incomplete factfinding, including not updating details following meeting with clients;

• Unclear and generic objectives, or objectives that summarise the adviser’s recommendation;

• Poor client understanding that could have been avoided with better explanations and presentation of the product, portfolio, and the risks associated with the investment.

A round table discussion about the changes to IHT planning brought about by the recent budget statements looked at the importance of cashflow analysis using suitable assumptions, clients’ capacity for loss and the three ‘Ls’ of longevity, lifestyle, and liquidity.   Considerations included:

• Should clients annuitise some of their pension pots to create a guaranteed base income to augment the State Pension to fund basic living expenses.  Leaving their other assets to fund lifestyle.

• How much should clients hold as liquid assets within drawdown plans to cope with market volatility.

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  Does the ‘three pot strategy’ still work.

The answers came back to the quality of factfinding, knowing our clients and encouraging them to articulate their goals and objectives in a way that allows us, as their adviser, to plan their lifetime assets in a way that produces an income that will not run out in their lifetime.  Always involve both partners in the conversation and allow both to speak for themselves.