The Financial Conduct Authority's ongoing advice review reveals that firms must provide evidence of the continued suitability of clients’ investments.
It has been recently reported that the Financial Conduct Authority (FCA), the regulator of financial services firms in the UK, has surveyed financial advice firms regarding evidence of suitability checks as part of its ongoing advice review.
Following concerns that some regulated advice firms have charged ongoing advice fees for advice that was not provided to clients, the FCA earlier this year asked the 20 biggest advice firms for information on their annual reviews.
In 2023, the FCA introduced the Consumer Duty, a series of new rules ensuring that financial services providers offer their consumers “good outcomes”. Financial firms have a responsibility and need to prove to the FCA in their first annual reports that “they are learning and improving continuously”.
Consumer Duty has brought to light unsuitable practices hidden in the UK financial industry for many years. It allows consumers to review and compare advice fees and move their investments accordingly.
Well-known wealth management firms have hit the headlines in the past year regarding complaints about their complex fee structures, hidden fees, high exit fees, unsuitable advice and lack of advice. St. James’s Place, True Potential and Quilter, to name but a few, have been at the centre of the complaints, with clients successfully claiming compensation.
The FCA, as part of its review, is now asking firms to provide a reference number for each client who received an annual review and to confirm the following:
- whether the client was assessed for their attitude to risk and, if so, when this was assessed and the evidence of it
- whether the client was assessed for capacity for loss and, if so, when this was assessed and the evidence of it
- any updates to the client’s personal circumstances and financial objectives/goals, alongside evidence and dates these changes were made
As part of its survey, the FCA asks firms if there is evidence of the continuing suitability of clients’ investments. The FCA requested:
‘We are expecting you to assess if there is evidence to show that the client’s existing products and investments were checked for ongoing suitability, taking into account the updated information collected from the client.
‘This may include, for example, a paraplanners report on the existing investments, a review of valuations, alternative product/fund research, adviser’s review report.’
The FCA is also asking if clients received written communication following the ongoing suitability assessment:
‘for example, a letter confirming that the investments had been reviewed and that no changes were recommended, or a different type of written communication.’
Have you received unsuitable advice or not had an annual review?
+ −If you have received unsuitable financial advice or have paid for advice that has not been received, speak to TLW Solicitors’ professional negligence team. You may be entitled to compensation.
Our experienced lawyers work on a ‘no win – no fee’ basis and can help you through the claims process, whether this is settled in the early stages directly with your financial adviser or through the Financial Ombudsman Service (FOS). FOS is a free service set up over 20 years ago to help customers and FCA regulated financial businesses settle disputes.
TLW Solicitors’ team has extensive experience successfully taking cases to FOS and securing client compensation, even if those claims have been rejected previously.
TLW Solicitors’ view
+ −Sarah Spruce, Legal Director at TLW Solicitors, said:
“We have seen first-hand how the ongoing advice fee situation affects large numbers of people, and there are still many more who could be impacted. The FCA continues to push financial advice firms to undertake proper checks and reviews, so that investors get good value for money and the best outcomes for their investments.
“Our specialist team can review your case and let you know if you could be eligible for compensation. If you have been affected, as well as a refund for any overcharged fees, you may be entitled to claim for the loss of growth on the funds, and interest.
“Get in touch for a no-obligation consultation to explore your options and whether you may be eligible to make a ‘no-win, no-fee’ refund claim.”
TLW Solicitors can help
+ −You may be entitled to compensation if you were charged excessive fees, given unsuitable advice or paid ongoing advice fees for a service you did not receive.
Contact our specialist team for a no-obligation consultation about your possible claim. Give us a call on 0800 169 5925, email info@tlwsolicitors.co.uk, or complete one of the forms below.
It is important to get advice as soon as possible, as strict time limits can apply.
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