Regulatory Risk and Rectification – November newsletter

Wealth

This month we reflect on the development of the FCA’s 2025 review of ongoing advice over the year; the industry’s reaction; and what’s expected to come in 2026.

We’ll also look at how Isio has supported a client in refining its remediation policy for missed annual reviews (2018–2023) following the FCA’s review. While commending the proactive intent, we identified areas that could invite regulatory scrutiny. Our recommendations ensured clarity and alignment with FCA expectations ahead of submission.

Ongoing IFA advice

Background

Earlier this year the FCA published the outcome of a review of the delivery of ongoing advice in recent years. We were pleased to see such a high positive rate of ongoing advice delivery (c.80% of cases). The results were encouraging and provided comfort that the industry continues to act in the best interest of clients.

Positive response

The findings from the FCA were broadly positive with the majority of firms appearing to demonstrate compliance. There is obvious concern surrounding the 2% where advisors had made no attempt to engage in a suitability review, however it is the grey area created by the 15% where clients had not engaged with advisers which is of more interest. In the majority of these cases, it is likely that firms will have attempted to engage with clients but they may face more scrutiny in the near future should they be asked to provide evidence of good practice.

There were a few key themes running through what the FCA viewed as positive behaviours, namely:

Communications	Processes and resources	Recordkeeping
Clear client communications are key with a description of services including nature and timing of the ongoing service.	Robust processes ensure reviews are scheduled in line with contractual obligations and advice meets regulatory standards.	Allows for sufficient evidence of delivery of services.

The survey included 22 of the largest firms which will likely be in a better position to have such good practices in place and the findings may not be representative of the industry as a whole. Smaller firms may not have the same resources at their disposal to maintain the same level of record keeping and many will have started a drive to review processes and policies.

Looking back to move forward

Evidence is key here. The FCA are expecting firms to be able to assess and provide evidence dating back to January 2018 that services have been carried out in line with contractual agreements. This includes maintaining clear documentation evidencing regulatory standard advice meetings have been conducted. There are a number of actions firms will be considering in response to this:

Review evidence of workings over the past few years.
Identify clients who may have suffered foreseeable harm as a result of acts or omissions by the firm
Pay redress either in full or partially in respect of charges levied.

What we do

Having worked closely with the FCA for a number of years, Isio are supporting firms with reviewing current ongoing advice practices and controls alongside Consumer Duty implementation in this area. We are able to help firms assess back book risk; establish the scale and impact of any issues; and identify and evaluate alternative strategies for managing risks.

Case Study

Following the publication of the FCA review in February 2025, our client developed a policy setting out principles for evaluating missed annual reviews between 2018-2023 and refund decisions for affected clients.

Isio was engaged to review the policy documents and set out our observations and comments, giving consideration to the FCA’s expectations. While the documents aimed to demonstrate proactive remediation, we highlighted that the structure risked prompting regulatory queries if shared in the current format.

We provided the client with potential approaches to address this prior to sharing with the FCA. This engagement highlights Isio’s expertise in balancing remediation objectives with regulatory compliance.

How can Isio help?

End to end review of ongoing advice proposition: target market and client segmentation; client onboarding and journey; service offering and contracts; charges and disclosure; delivery.

Review and comparison of past and current processes and practices against FCA rules and guidance. Recommendations for improvements and priority actions.

Assessment of records of delivery. Deep dive into client file records to assess delivery, quality of records, and reconciliation of central records to client file evidence.

Data interrogation and validation, assurance work on firms’ actions to date; deep dives into specific areas of concern; and assistance with response to regulatory reviews.

What’s next for ongoing advice?

As 2025 begins to wind down, we expect to see a number of developments going into the new year. We’re beginning to see many firms set aside capital in response to the FCA’s review which suggests that despite the positive outcomes of the review there is still room for improvement in the delivery of ongoing advice.

This year has seen the FCA take action as it continues to engage with firms on their current processes, and we expect that to continue into 2026. Next year will also see the FCA launch a consultation on their proposed rule changes which should give firms further opportunity to re-consider their forward-looking approach to ongoing services. As the changes come into play, Isio can support firms in interpreting the new rules and advise on any changes to practices which could be considered.