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The FCA was concerned that ongoing advice services may not always have been delivered by firms where they had been offered. To address this concern, the FCA wrote to 22 of the largest advice firms on 15^th February 2024, asking for information and data on their delivery of ongoing advice services over the previous 7 years.

The data provided by these 22 firms shows that what constitutes ongoing advice can be broad. Individual client contracts set out the services offered by each firm, with each firm generally providing ongoing suitability reviews. As such the FCA focused its review on the delivery of suitability reviews. However, ongoing advice services can also include related services such as performance reviews, arranging transactions or managing a relationship between a retail client and a discretionary investment manager.

This morning the FCA published the outcome of its review. The data provided by firms shows that the ‘vast majority’ of ongoing suitability reviews were delivered by firms to clients over the period 2017 – 2023, with:

• 83% of client reviews being delivered,
• 15% of clients declining or not engaging with a review, and
• 2% of cases where firms had made no effort to deliver the review.

There were also a small subset of firms which were not readily able to provide data for all of the years the FCA requested.

The FCA identified some good and poor practices in its review, including:

Good practices

• Documentation clearly setting out what clients can expect from ongoing advice services.
• Having appropriate systems and controls in place to ensure suitability reviews were scheduled and documented as required.
• Policies to stop collecting ongoing advice services fees where a client has not engaged with the service for some time.

Poor practices

• Ineffective monitoring to ensure ongoing advice services were provided as required.
• Insufficient management information to allow senior management to have adequate oversight of the services.

The FCA is most concerned about the 2% of cases where firms have made no effort to deliver the review, and it is likely that redress will be due for these cases. Where a firm has been ready, willing and able to provide suitability reviews but a client has declined the service, it is less likely that redress will need to be paid. However, if a client has declined the service over a number of years, consideration should be given as to whether ongoing advice services are still in the client’s best interest. The FCA has left details of what any redress should constitute for firms to decide.

In terms of next steps, the FCA expects firms to review its findings and carry out a proactive review of its ongoing advice services provision over the period 2018 – present. If firms identify reviews which have not been carried out as required, they should take steps to remedy the situation. Any complaints received by clients on this matter should be dealt with in accordance with the Consumer Duty and complaints requirements.

The FCA intends to conduct further work on how firms are addressing the FCA’s recommendations later in 2025. It is likely that it will test how firms implement its guidance first, with further guidance being issued if it still has concerns.

For enquiries, please contact us at 0207 436 0630 or via email at info@thistleinitiatives.co.uk.