FCA simplifies investment advice rules to enhance consumer access
The Financial Conduct Authority has launched a consultation to simplify rules for pensions and investment advice, aiming to increase consumer access to tailored support. The proposals seek to reduce regulatory burden and foster innovation in the advice market, with comments requested by May 22, 2026.
Streamlining the advice framework
The Financial Conduct Authority (FCA) proposes to consolidate the Conduct of Business Sourcebook (COBS) 9 and 9A into a single framework, removing distinctions between advice on various investment products.
This aims to reduce perceived regulatory burden and clarify existing flexibilities for firms.
Key proposals include deleting certain COBS rules where the Consumer Duty provides sufficient protection and reframing suitability assessments to be proportionate to the service scope and recommendation complexity.
The FCA will also retire FG17/8 guidance, publishing updated case studies to clarify 'sufficient' information.
Rules will be updated so firms are not required to assess a customer's knowledge and experience if it offers no discernible benefit.
Language on risk willingness will be simplified, distinguishing it from the ability to bear loss.
Suitability reports will be streamlined to include only useful, relevant information, aligning with Consumer Duty expectations.
The FCA confirms it will maintain existing charging and qualification requirements for advice.
Addressing the advice gap
The consultation addresses the persistent issue of low engagement with regulated financial advice, noting that only 8.6 percent of UK adults received such advice in the 12 months to May 2024.
Firms have consistently reported struggles in designing commercially viable simplified advice models due to perceived regulatory risk and limitations in tailoring ongoing services.
The FCA's proposals, developed after stakeholder feedback, aim to enable more consumers to access a wider range of advice services.
The paper also seeks views on ongoing advice services, proposing to replace annual suitability requirements with periodic reviews and clarifying that firms may charge for ongoing related services.
Two discussion chapters invite initial feedback on trail commission payments and suitability requirements for professional clients.
Cautious progress for a complex market
This initiative represents a crucial step in making financial advice more accessible, directly addressing long-standing barriers for both consumers and firms.
While the simplification of rules is welcome, the decision to defer changes on trail commission and maintain qualification standards suggests a measured, rather than revolutionary, approach.
Its ultimate success hinges on genuine industry engagement and a shift in firms' willingness to innovate within the clarified framework.