The Financial Conduct Authority (FCA) has found that the ‘vast majority’ of financial advisers are delivering suitability reviews, as it has requested.
The regulator has looked at data from 22 of the largest financial advice firms to draw its conclusions.
The data showed that suitability reviews were delivered in around 83% of cases. In 15% of cases the FCA was told that clients either declined or did not respond to the firm’s offer of a review. There were fewer than 2% of cases where firms reported they had made no effort to deliver reviews.
The rules on ongoing services were introduced more than a decade ago. The FCA said it will review the regulatory approach for these services to decide on any changes needed to reflect the different world we live in now.
Simon Walls, interim executive director of markets at the FCA, said: “Ongoing financial advice and support can be a fantastic service and can be important in helping people make the most of their money. Relationships between advisers and customers can last many years and can take different forms.
“In the vast majority of the cases we looked at, firms delivered ongoing advice for their customers. But, in a small number of cases, they haven’t attempted to provide the services they offered and customers are paying for. In those instances, they will need to put that right.”
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Chris Jones, chief product officer at Dynamic Planner, said: “The spectre of the FCA’s Review of ongoing advice has been looming since early December with various levels of expected severity and impact.
“It is no surprise to Dynamic Planner that the 22 largest firms had delivered suitability reviews to 83%, as many are clients of ours and use Dynamic Planner to deliver the FCA’s stated best practice suitability, efficiently in a way that provides value to the end customer. The advice industry and its advice and service offered is vital, it is encouraging that the FCA’s findings did not harm it.
“While this can be seen as a positive for the industry, they are also delivering on their consumer protection obligations, and simply putting the responsibility where it belongs on the advice firms themselves,” Jones continued.
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“We expect there to be further data requests for the financial advice portfolio before the summer and where they have set out good practice in terms of systems, record keeping and what constitutes an acceptable suitability review you would be wise to meet those standards before then, whoever you are.”
Richard Parkin, head of retirement for BNY Investments, added: “The FCA’s review found that the majority of financial advice firms are providing the ongoing service that clients are paying for. BNY Investments’ latest research, Retirement Advice in the UK: Time for change?, supports this view.
“Our survey of financial advisers found financial advice firms scored highly with clients for their ongoing service, with 92% of advised clients surveyed feeling on track to achieve the retirement they envisaged.
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“Certainly, retirement is an area where ongoing reviews are essential,” Parkin continued. “Our research showed that financial advice firms are continuing to strengthen their offering here, with over half (60%) stating they are looking to enhance their services.
“The regulator acknowledged that clients may not always engage with firms on annual reviews. We expect advisers will be pleased to see that the FCA is taking a proportionate approach to redress in these circumstances.”
