This month the Financial Conduct Authority released an important portfolio strategy letter to financial advisers and investment intermediaries.
Within it, the regulator has highlighted two primary areas of focus: ongoing advice services and retirement income advice.
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 advisory 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.
Download Recordsure’s Insight Guide for ongoing advice reviews here.
Recordsure – Achieve 100% oversight and efficient evidencing of outcomes
Meanwhile 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.
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.
Businesses might consider increasing personnel to manage ongoing advice reviews, but Recordsure AI offers an alternative – replacing outdated, labour-intensive processes with efficiency.