The Financial Conduct Authority has launched a consultation proposing to replace mandatory annual suitability reviews with periodic assessments for ongoing advice services.
Published on 25 March 2025, the consultation paper sets out plans to replace the fixed annual review obligation with a flexible, periodic model aligned with individual client needs and the consumer duty framework.
Under the proposed changes, firms would be responsible for determining the appropriate frequency of suitability assessments based on each client's circumstances, rather than adhering to a prescribed annual schedule. The regulator has framed the move as a way to give advice firms optimised flexibility in designing ongoing services that serve a broader range of consumers, including those with simpler financial needs or lower-risk portfolios.
Costs, consumer duty, and compliance
The FCA has identified several rationales for the proposed shift. For clients with straightforward, low-risk investments, less frequent reviews may align more closely with their actual needs. A flexible review model could also reduce the cost of ongoing advice services, potentially widening access for consumers who would otherwise be priced out. Under the consumer duty, firms are already required to demonstrate that services provide fair value, which the regulator believes reduces the need for a prescriptive minimum review frequency.
The FCA has stated it will monitor implementation through regulatory returns, complaints data, and multi-firm reviews, and will carry out consumer research where necessary. It has been explicit that firms failing to meet their obligations will face regulatory action.
However, the regulator is also seeking feedback on whether the proposed flexibility provides sufficient safeguards against firms reducing review frequency without adjusting pricing accordingly. The consultation raises the possibility of additional transparency requirements or guidance to mitigate the risk of consumers being enrolled in ongoing services that do not deliver fair value.
Context and background
The proposal follows a period of heightened regulatory scrutiny of ongoing advice practices. In February 2024, the FCA wrote to 20 of the largest advice firms requesting information about their ongoing services in light of the consumer duty. Later on, the regulator published findings from a multi-firm review, which found that suitability reviews were delivered in 83% of cases examined. In a further 15% of cases, clients had declined or not responded to a firm's offer of a review. In 2% of cases, no attempt had been made to contact the client.
The review prompted significant industry attention. St James's Place set aside a provision of GBP 426 million for potential client refunds in relation to ongoing advice concerns, following an increase in complaints. Quilter also indicated it may face remedial costs after being among the firms contacted by the regulator in 2024.
The consultation represents a meaningful shift in the FCA's regulatory approach to ongoing advice, moving from prescriptive rules towards an outcomes-based model grounded in the consumer duty. The outcome of the consultation is expected to have broad implications for how advice firms structure, price, and evidence their ongoing service propositions.
