Summary
What this article covers in 30 seconds
- The FCA portfolio letter highlights ongoing advice services and retirement income advice as priorities.
- Ongoing advice revenue has increased, raising questions about fair value and delivered services.
- CEOs must review systems and controls against the retirement income advice thematic findings.
- Firms need clear records of communications, reviews, outcomes and due diligence.
Our colleagues at TCC Group have unveiled their expert insights on the recent portfolio strategy letter from the FCA, which was released on the 7th October 2024. This crucial communication outlines the future roadmap and expectations for financial advisers and investment intermediaries over the upcoming two years.
Within it, the FCA has highlighted two primary areas of focus: ongoing advice services and retirement income advice.
Ongoing advice services
The FCA’s recent findings reveal a dramatic increase in the proportion of ongoing advice revenue within firms, leaping from 60% in 2016 to 80% in 2023. Plus, an expected rise to 90% as new clients engage in ongoing advisery agreements is expected. This surge has highlighted the potential that some firms could be overlooking the actual value and cost-effectiveness of their ongoing advice services, leading to clients potentially being charged for services that fall short of delivering fair value.
Therefore, it is vital that firms ensure they deliver tailored advice that aligns with each client’s specific needs and the terms that have been agreed upon.
The FCA will closely scrutinise advisers and intermediaries to confirm clients are not overcharged for services they do not receive and to verify that proper record-keeping and oversight practices are in place.
Retirement income advice
The FCA has directed attention to its Thematic Review of Retirement Income Advice letter from March 2024.
CEOs must guarantee that their firms have thoroughly reviewed and updated their systems and controls in line with the thematic review findings. The FCA will continue its evaluations to determine if firms are achieving favourable client outcomes in this field.
With the extensive guidance that the regulator has provided, firms have no room for excuses in meeting the FCA’s standards.
Read the full TCC insight here
A proactive approach
In accordance with these regulatory guidelines, the responsibility lies squarely with financial advice firms to maintain thorough records of client communications, reviews, and outcomes. Ensuring that customer advice is delivered appropriately and cost-effectively is essential, as is having evidence of due diligence when reviews are due.
While many businesses might consider increasing personnel to manage ongoing advice reviews, Recordsure technology offers a practical and economical alternative. This innovative solution replaces outdated, labour-intensive processes with efficient processes.
Frequently asked questions
The priorities are ongoing advice services and retirement income advice.
The FCA is checking whether clients are overcharged for services they do not receive and whether oversight records are adequate.
They should maintain records of client communications, reviews, outcomes and due diligence when reviews are due.