Reforming the advice landscape: FCA proposals simplify and support wider access to advice

The Financial Conduct Authority’s (FCA) consultation paper CP26/10 is the clearest signal yet that the regulator wants to make investment advice easier to deliver, easier to access and, crucially, commercially viable.

Published on 25 March 2026, the consultation proposes a simplification of the pensions and investment advice regime for retail consumers, alongside reforms to ongoing advice services. The FCA is also seeking initial feedback on possible future changes to trail commission, commission for non-advised distribution and suitability requirements for professional clients.

The consultation marks the final stage of the FCA’s wider Advice Guidance Boundary Review (see our initial report here) and aligns closely with the UK government’s broader objective of unlocking retail investment and narrowing the persistent “advice gap” that leaves many consumers unable – or unwilling – to access regulated advice.

It also reflects a continued shift towards a more judgement-based and outcomes-focused regime, with greater reliance on the Consumer Duty.

In this briefing, we examine the key proposals and their practical impact.

Supporting simplified advice models

For some time, firms have argued that the current suitability framework makes simplified advice models difficult to design and even harder to deliver profitably. The regulatory framework often pushes them towards comprehensive, highly documented and therefore higher-cost advice, even where the client’s needs are relatively straightforward.

The FCA acknowledges this concern, but notes that firms frequently collect more information than is needed to make a suitable recommendation, largely to mitigate the risk of future regulatory challenge. The result is defensive compliance, lengthy suitability reports and, ultimately, a market in which many consumers do not access advice at all.

This is fundamentally inconsistent with the UK government’s broader growth agenda and its ambition to encourage greater retail investment. As part of a wider policy reset, the consultation therefore aims to support the development of more proportionate simplified advice models that can sit alongside comprehensive advice and targeted support services.

Simplifying and consolidating suitability rules

The FCA proposes to consolidate the existing suitability rules in COBS 9 and COBS 9A into a new single chapter, COBS 9C.

At present, the framework is fragmented across separate regimes for MiFID business and insurance-based investment products in COBS 9A and for non-MiFID business and other life policies and pensions in COBS 9. This creates unnecessary complexity, particularly for firms operating across multiple product lines subject to differing EU-derived and UK requirements.

The consolidation is expected to help firms better understand the FCA’s expectations and reduce compliance costs. It would also enable firms with permission to provide basic advice to advise on all stakeholder products, regardless of whether or not they are currently within the scope of MiFID or the Insurance Distribution Directive (IDD).

Assessing suitability: From “necessary” to “sufficient” information

One of the FCA’s most significant proposals is to replace the requirement for firms to obtain “necessary information” with a requirement to obtain “sufficient information” when assessing suitability.

Under the current framework, many firms take a cautious approach to what constitutes “necessary information”, often defaulting to comprehensive fact-finding regardless of the nature or scope of the advice. This has been widely cited as a key barrier to developing simplified advice models.

The “sufficient information” standard is intended to reflect a more proportionate and outcomes-based approach. In practice, firms would be expected to adopt a risk-based approach, exercising greater judgement in determining what information is needed by reference to the nature and scope of the advice, the complexity of the product or service and the characteristics of the client, including any vulnerability.

For example, advice on investing a lump sum into a diversified stocks and shares ISA should not require the same level of information gathering as advice involving non-mainstream assets through a SIPP. However, existing requirements for pension transfer advice involving safeguarded benefits would remain, where firms must continue to comply with additional information requirements in COBS 19, as well as existing FCA guidance.

To support the new approach, the FCA proposes to embed proportionality directly into Handbook guidance and develop case studies with examples of simplified advice where firms can consider a less comprehensive set of information.

The key message is that firms do not need to conduct a comprehensive review of every client’s circumstances in every case – they need a “reasonable” basis for concluding that a recommendation is suitable. This flexibility could improve the commercial viability of simplified advice models and help more consumers access regulated advice.

A proportionate approach to knowledge, risk and the ability to bear losses

The consultation addresses concerns that existing knowledge and experience assessment requirements can operate as an unintended barrier to advice, as they may be interpreted as implying that customers must always have some prior investment experience or knowledge to receive advice. The FCA wants to clarify that these assessments should be applied proportionately and are not required in all cases, particularly where the recommended product is straightforward and its target market includes clients with no prior investment experience.

Emphasising consumer understanding under the Consumer Duty, the FCA suggests providing guidance clarifying that firms should provide information to support their clients’ understanding of a recommended service or product. Where an assessment of knowledge is needed, firms can educate their clients as part of that process.

There are no changes to the application of the suitability rules to professional clients. This means that firms undertaking MiFID business can continue to assume that professional clients possess the requisite level of knowledge and experience to understand the risks associated with the services and transactions for which they have been categorised as professional clients.

On the assessment of the investment risks a client is willing to take to meet their objectives, the FCA proposes to standardise the terminology by introducing a single concept of “attitude to risk”, replacing overlapping concepts such as “risk profile”, “risk tolerance” and “preferences regarding risk taking”. The FCA also confirms that firms are not required to use complex psychometric tools or extensive questionnaires. Whilst sophisticated approaches may be appropriate for comprehensive advice or complex portfolios, simpler approaches will be sufficient where the nature of the service or product allows.

When determining a client’s ability to bear losses, the FCA suggests that a proportionate assessment is acceptable when considering the client’s overall financial situation. The treatment of professional clients remains unchanged, with firms undertaking MiFID business remaining able to assume that per se professional clients can bear investment risks consistent with their objectives.

Overall, the direction is towards assessments focusing on the substance of the recommendation, rather than the volume or complexity of information gathering or process design.

Suitability reports: shorter, clearer and less defensive

The FCA’s proposed reforms to suitability reports have a clear focus on reducing unnecessary complexity and improving consumer understanding.

Industry feedback has indicated that suitability reports have become overly long and complex to mitigate regulatory risk rather than helping clients understand why a recommendation is suitable. The FCA seeks to move away from this “defensive” approach.

Under proposals aligning COBS 9 and COBS 9A, firms would be required to provide a suitability report where they give advice relating to any financial instrument, including where the recommendation is not to take action and where the client is not resident in the UK.

In terms of content, firms would need to explain why a recommendation is suitable and identify any potential disadvantages of a transaction. However, reports should be concise, proportionate and focused on what the client needs to know. They do not need to duplicate information or risk warnings that have already been clearly provided elsewhere.

The FCA also intends to replace current disparate requirements for the timing of the report with a single obligation to provide the suitability report before the transaction is concluded for all types of business, subject to the retention of the rule enabling provision the report immediately after a transaction where distance communications prevent prior delivery.

These changes would require firms to revisit their reporting templates and supporting processes to ensure they align with the new requirements and the FCA’s expectations under the Consumer Duty.

Consumer Duty as the primary framework

A central theme of the consultation is the FCA’s growing reliance on the Consumer Duty as the primary framework for ensuring good customer outcomes.

The FCA proposes to remove several detailed and overlapping rules where it considers that equivalent or stronger protections are achieved through the Consumer Duty. This includes requirements relating to the assessment of alternative products, restrictions on unsuitable recommendations and certain elements of suitability reporting.

The FCA has also considered the implications of this approach for consumer redress. While the removal of some rule‑based protections may limit the availability of private rights of action in certain cases, consumers will continue to be able to seek redress directly from firms or via the Financial Ombudsman Service. The FCA views this as a proportionate trade‑off, noting that the Consumer Duty provides an appropriate degree of protection for retail clients.

No relaxation of charging rules or qualification standards

Importantly, the FCA is not proposing to relax the charging rules introduced following the Retail Distribution Review (RDR) or the adviser qualification requirements.

Although firms have argued that charging restrictions can make simplified advice commercially difficult to deliver, the FCA considers that introducing separate charging models for different forms of regulated advice would risk creating complexity and undermining the integrity of the advice market.

The FCA also maintains that the current Level 4 Diploma remains the appropriate minimum qualification standard for regulated advice.

Ongoing advice services and disengaged clients

The consultation proposes greater flexibility around ongoing advice services. The FCA would clarify that firms can offer and charge for services related to advice even where no new personal recommendation is provided. However, firms should ensure that the services meet an identified need and provide fair value, and that the clients are given sufficient information to make an informed decision about the ongoing service.

Annual suitability reviews would be replaced by more flexible periodic reviews based on the client’s needs and circumstances, in keeping with the Consumer Duty.

At the same time, the FCA reinforces expectations around disengaged clients. Where consumers are paying for ongoing services but are not receiving value, firms should have appropriate processes in place, including stopping fees if the client’s disengagement means they are not getting the service they are paying for. The FCA proposes new guidance to clarify its high-level expectations as to how firms should fulfil their Consumer Duty obligations when dealing with disengaged clients. In addition, the FCA intends to work with industry to publish examples of good and poor practices.

This is likely to be an area of practical focus for wealth managers and adviser firms, particularly given existing supervisory attention on fair value and ongoing service delivery.

Trail commission, non-advised distribution and professional client suitability

In addition to the core proposals, the FCA is seeking initial views, rather than consulting on specific rule changes, in three areas: legacy trail commission, commission in non-advised distribution and the suitability framework for professional clients.

On trail commission, the FCA is exploring whether further intervention is needed to address legacy arrangements that continue to generate ongoing payments to advisers from product providers on pre-RDR business. The FCA is interested in understanding consumer outcomes, impacts on firms and if additional measures, such as enhanced disclosure or a phased sunset, may be appropriate.

The FCA is also examining the role of commission in non-advised distribution channels. In particular, it highlights differences between platform-based models, where commission received from a fund manager is passed on to clients in full, and execution-only brokerage services, where firms may receive third-party payments in limited circumstances. The FCA wants to understand the impact on firms and consumers, including if these commissions were no longer permitted.

Finally, the FCA is inviting feedback on the suitability framework for professional clients. The current regime is fragmented, with differing approaches depending on whether the business falls within MiFID, the IDD or non-MiFID regimes. The FCA is considering whether there is merit in recalibrating and aligning these requirements, particularly in light of the FCA’s consultation on client categorisation.

Next steps

The consultation closes on 22 May 2026, with a Policy Statement expected in Q4 2026.

Given that the consultation reflects a shift towards a more judgement-based and outcomes focused framework, the proposals provide firms with greater flexibility to design advice services that are proportionate to client needs, but also place increased reliance on firms’ governance, judgement and Consumer Duty compliance.

Firms should consider their current suitability processes and ongoing advice service models in light of the proposals. Early engagement with the consultation may also help firms address any concerns with the regulator and shape the final framework to better position their business for implementation.