FCA ONGOING SERVICE REVIEW

A few weeks ago, the FCA finally published their much anticipated update on the findings from their review into whether advisers were delivering the ongoing advice services that consumers have paid for. Whilst SJP and Quilter had already confirmed skilled person reviews (s166) into ongoing advice services (with provisions confirmed of £426m and £76m respectively)¹, the FCA wrote to 22 firms back in February 2024 asking for data on the delivery of ongoing advice dating back to 2017.

Critically, the FCA confirmed that they do not currently view the issue to be systemic but plan on continuing to monitor the situation. They did, however, confirm all firms should read the findings and take the necessary action to make sure consumers are getting the service they are paying for.

We have noted a lot of interest from advisory firms in the FCA review, with common queries covering topics including: the expected required contents and adequacy of an ongoing review file note (something the FCA review didn’t look into), the approach FOS might take in the event of a client complaint, and different approaches firms can take for clients who might decline a review on multiple occasions.

The FCA have confirmed that they are looking to complete further work during 2025 to review the existing rules relating to ongoing services and provide further guidance to the industry.

In the meantime, they have pointed to a number of activities which firms could consider:

• Complete and document a firm review against the FCA’s findings.
• Review client agreements to ensure they are clear about the nature and timing of the ongoing service offered.
• Ensure policies are in place to stop collecting fees where clients are not engaged with the service.
• Review systems, processes and record-keeping in respect of the delivery of ongoing services with sufficient management information to enable appropriate oversight.
• Monitor complaint levels in respect of ongoing advice services and, if required, consider if any proactive review might be necessary, for example where it is difficult to evidence the services were delivered in line with the contract / FCA rules.
• Consider the minimum contents of ongoing suitability reviews ensuring they align with the FCA cited good practice including:
  • Updates to clients’ circumstances, objectives, attitude to risk and capacity for loss.
  • A review of the risk profile, charges and performance of existing investments to ensure they remain suitable.
  • Clear communication to clients of the outcome of the review being a personal recommendation.

At Transact, our focus is on making financial planning easier and enabling you to deliver client reviews in an efficient way. This includes the ability to produce and distribute Investor Reports to clients, provide valuations and transactional API integrations with key back office systems. Integrations can enable a client view of data which is easily surfaced ahead of any review. Our recent enhancement such as providing wrapper references to help facilitate client matching for portfolio reporting supports these integrations.

If you are interested in discussing any aspect of how Transact is looking to support making the process easier, please speak to your BDM.

If there is sufficient interest, we are always open to running a webinar on topics like this facilitating external input and an opportunity to share best practice with other like-minded advisers. Do speak to your BDM if this would be of interest.

^{1Source: CityWire New Model Adviser article entitled ‘Quilter hit with ongoing advice skilled person review after FCA talks’, April 2024}

 

 

1. Introduction
2. TOL Recent Enhancements 
3. Our New Account Opening API
4. CURO 3 & Fee Reconciliation
5. FCA Ongoing Service Review
6. Transact – BlackRock MPS Update
7. Offshore Reporting Funds – Excess Reportable Income and Capital Gains
8. Tax Year End Reporting – Annual Allowance Charge And Scheme Pays
9. A Study In Gifting – Distributing Benefits From A Relevant Property
10. Interest On Cash
11. Transact Events 2025