On 25th March the FCA published the consultation paper CP26 / 10: Simplifying the pension and investment advice rules, which outlined how the regulator would be consulting on firms being able to give more simplified forms of advice to consumers. CP26 / 10 is a wide-ranging paper which seeks stakeholder feedback on a proposed simplification of the current rules on pensions and investment advice, which are found in the Conduct of Business Sourcebook( COBS).
Key points:
• The FCA is proposing to simplify existing suitability rules within COBS, making them less complex and easier to apply.
• There will be a shift away from prescriptive, detailed requirements towards a more principles-based regulatory approach.
• The changes aim to reduce regulatory burden while still maintaining strong consumer protection standards.
• A significant proposal is to remove the mandatory annual suitability review requirement.
• Instead, firms would adopt a more flexible, clientcentric approach, carrying out periodic suitability reviews based on individual client needs and circumstances.
• This reflects a move towards outcome-focused regulation, giving firms greater discretion in how they meet suitability obligations.
The need for ongoing suitability reviews was introduced in 2018 under MiFID II and IDD legislation with the requirement being that if a firm is providing ongoing advice services to a client in relation to business that falls under MiFID II or the IDD then periodic suitability assessments must take place at least once a year.
Whilst there is no doubting the importance of ongoing advice services and regular suitability reviews to ensure that both investments held and the ongoing service remain suitable for clients’ current needs, risk profile and objectives, it is acknowledged that all clients have their own bespoke situations and many have varying needs at different stages of their lives.
Throughout an individuals’ natural life cycle, financial goals, risk tolerances and capacity for loss will change. At some stages, such as moving into drawdown, managing an IHT issue or dealing with a potential vulnerability, more frequent suitability reviews may be necessary whilst for those with
simpler, low-risk investments or younger consumers in the accumulation phase of investing for retirement, less frequent reviews might be a better fit to their actual needs.
In February 2025, the FCA published findings from its multi-firm review of ongoing advice, that showed that 15 % of clients declined or did not engage with offered reviews, supporting a shift toward a more flexible, clientcentric approach.
It is also acknowledged that annual reviews can be resource intensive for firms. The recent FCA information request( Understanding the advice market: financial advice firms survey 2025) findings indicated that since 2021, despite the number of authorised firms falling by 15 %, adviser numbers have remained steady at around 31,000. Whilst the steady adviser number is encouraging, this alone does not help reduce the acknowledged‘ advice gap’. With this proposal to allow a more flexible approach to ongoing suitability
14 | The Adviser