How should firms be considering quality and suitability of advice?

What happened?

In the third part of this compliance series, Garry and David discuss how firms should evaluate the quality and suitability of their ongoing advice. Garry notes that the FCA’s thematic review concentrated heavily on service delivery metrics (such as whether annual review meetings occurred), rather than the qualitative standard of the advice itself.

David emphasizes that under the Consumer Duty, demonstrating the quality and suitability of ongoing advice remains a non-negotiable expectation for firms that have transitioned up to 90% of their client base into recurring fee structures.

Why does it matter?

The traditional compliance models historically prioritized suitability at the point of initial sale, but ongoing advice suitability is now equally vital. Firms must demonstrate that repeated annual reviews are delivering actual, documented benefits and remain suitable for each client’s evolving circumstances.

A critical area of risk is the ‘no change’ review, where everything is identical year-on-year. While superficially simple, these static reviews represent higher potential risk and require a robust, controlled oversight environment to justify ongoing fee collection.

Who is affected?

This regulatory focus affects financial planners, wealth management firms, and compliance leaders who oversee recurring service propositions and file review operations.

Key risks

• Static Reviews: Standardizing annual reviews with no portfolio or strategy changes, which represents higher suitability risk without rigorous justification.
• Checklist Complacency: Focusing solely on process checklists (i.e. scheduling the meeting) while neglecting to monitor and evidence advice quality.
• Friction in Oversight: Operating without a controlled environment to audit and monitor advice suitability at scale across different customer groups.

Actions to take

1. Adopt a Risk-Based Approach: Implement deeper file reviews and audits for clients undergoing consecutive ‘no change’ annual reviews.
2. Establish Quality Controls: Build a controlled advice oversight framework that assesses the qualitative value of advice rather than just completion rates.
3. Evidence Client Outcomes: Document exactly why ongoing advisory strategies remain suitable for each client’s specific circumstances.

Wider implications

The FCA’s focus is evolving from basic operational tracking to checking the actual substance and value of ongoing advice. Advice firms must be prepared to defend the suitability of their recommendations during subsequent thematic probes.

Recommendations

Firms should employ external advice quality experts to conduct objective file reviews and build robust compliance monitoring frameworks that capture qualitative advice outcomes.