FCA proposals aim to simplify advice and widen access to investment advice

The FCA’s long-awaited consultation paper CP26/10 marks an important step in the FCA’s wider review of the UK retail advice regime. The proposals are designed to make investment advice easier to deliver, easier to access and more commercially viable, while supporting the UK government’s broader objective of encouraging greater retail participation in long-term investing and narrowing the “advice gap”.

In our full briefing, we examine the FCA’s proposals in further detail, including the move from “necessary” to “sufficient” information when assessing suitability, the consolidation of the fragmented suitability framework into a new COBS chapter, reforms to suitability reports and changes to ongoing advice services.

Read the full briefing here.

A central theme running throughout the consultation is proportionality. The FCA acknowledges that firms have often adopted cautious and process-heavy approaches to suitability, driven in part by concerns about regulatory challenge. In practice, this has led to defensive compliance, including comprehensive fact-finding and lengthy, complex suitability reports, even where a client’s needs are relatively straightforward. Arguably, that outcome is inconsistent with the FCA’s consumer protection objective. 

The consultation therefore signals a clear attempt to support more proportionate simplified advice models that can sit alongside comprehensive advice and targeted support services. The FCA’s increased emphasis on firms’ judgement, proportionality and the Consumer Duty will give firms greater clarity and flexibility to design advice models that are more streamlined and accessible.

That said, the proposals do not reduce firms’ overall compliance responsibilities. Rather, they shift the focus away from prescriptive process requirements and towards increased reliance on firms’ governance, judgement and Consumer Duty compliance. Firms will still need to demonstrate that recommendations are suitable and that good outcomes for customers are being delivered, but with greater flexibility in how they get there.

In practice, firms are therefore likely to need to revisit suitability processes and ongoing advice service models in light of the proposals. Engaging with the consultation may also help firms flag any concerns with the regulator at an early stage and shape the final framework to better position the industry for implementation.