The Financial Conduct Authority (FCA) is writing to 20 of the largest financial advice firms requesting information about their delivery of ongoing services, for which their clients continue to be charged after advice has been given.
In its survey, the regulator asks if firms have assessed their ongoing services in response to the introduction of the Consumer Duty, and whether they have made any changes as a result.
It also asks for data on the number of clients due a review of the ongoing suitability of the advice as part of the service, how many received that review, and how many paid for ongoing advice but whose fee was refunded as the suitability review did not happen.
The FCA said it is collecting this information to assess what, if any, further regulatory work it may undertake in this area and expects to provide a further update having considered the firms’ responses.
The regulator pointed out that around 20 of the largest advice firms were receiving the survey to ensure the widest possible understanding of market practice is achieved. It added the selection was not based on any particular concerns with those firms.
The FCA had indicated it would undertake some cross-firm work in this area in a letter it sent in December 2022. In this, it set out its concerns that advice firms were not adequately considering the relevance, nature and costs of these ongoing services for all their clients.
A further letter sent in January 2023 explained how advice firms should approach the incoming Consumer Duty, reminding firms that it requires firms to act in good faith towards customers, avoid causing them foreseeable harm, and enable and support them to pursue their financial objectives.
In a subsequent Consumer Duty webinar with firms held in December 2023, the FCA flagged concerns that it appeared some consumers may be paying for a service, such as an annual review, but were not receiving it.
In 2021, the FCA published a strategy to support a thriving consumer investment market.
The FCA added that its data gathering announced today on ongoing services forms part of that work to raise standards so people can invest with confidence and central to that strategy is ensuring people can access advice if they want it and have trust in the services on offer.