CP26/10: A significant step towards enabling more consumers to access advice at a cost they can afford
On 25 March 2026, the Financial Conduct Authority (FCA) published CP26/10, a significant consultation paper setting out proposals to simplify, consolidate and modernise the regulatory framework governing pensions and investment advice. The consultation forms part of the FCA's Advice Guidance Boundary Review (AGBR) and, together with the recently introduced Targeted Support framework (see our article on that here), aim to enable more consumers to access a continuum of support to meet their varied needs. Responses are sought by 22 May 2026, with a Policy Statement anticipated in Q4 2026.
Below, we summarise the key proposals contained in the consultation and consider the implications for firms operating in the UK’s financial advisory market.
Background and context
The FCA's proposals are driven by a persistent concern that too few adults in the UK receive regulated financial advice. According to the FCA's Financial Lives Survey 2024, only 8.6% of adults (approximately 4.6 million people) received regulated financial advice related to investments, saving into a pension or retirement planning in the twelve months to May 2024. This is despite evidence suggesting that consumers generally value the advice they receive, with 87% reporting that advice was clear and understandable and 85% reporting confidence in the advice given.
Stakeholders have consistently told the FCA that firms struggle to design commercially viable simplified advice models because of the perceived regulatory risk of doing so without considering a customer's full circumstances. The regulator acknowledges that uncertainty about its rules and concerns about potential liabilities have limited the development of simpler advice propositions.
The consultation seeks to address these challenges whilst maintaining consumer protection. With the targeted support rules now in place, the FCA's focus is on completing outstanding policy work so that the market can develop and deliver a wider range of support for consumers.
Key proposals: simplifying the advice rules
Consolidating COBS 9 and COBS 9A into a single framework
The FCA proposes to consolidate the suitability rules currently contained in COBS 9 and COBS 9A into a single new chapter, COBS 9C. This will largely remove the current framework which applies different rules depending on whether the advice relates to products within the scope of the Markets in Financial Instruments Directive (MiFID) or relates to insurance-based investment products and other life policies and pensions. Stakeholders have told the FCA that the current framework is challenging, particularly when firms wish to innovate and offer new services. The aim of the consolidation is to help firms more easily understand the FCA's expectations overall regardless of the scope of advice and investment product and thereby reduce costs.
Whilst the proposed consolidation is likely to be welcomed overall by firms with multiple product types and wrappers, in practice it is likely to require careful mapping from existing Chapter 9/9A based customer journeys, policies, systems and controls.
From ‘necessary’ to ‘sufficient’ information
A notable change concerns the information firms must obtain when assessing suitability. The FCA proposes to replace the current requirement to consider ‘necessary’ information with an expectation that advisers consider ‘sufficient’ information. The regulator considers that ‘sufficient’ better reflects an outcomes-based approach whereby different advice services, and different recommendations to different clients, can reasonably be supported by taking into account different information.
This distinction is particularly significant for simplified forms of advice with limited scope. Firms should be able to take a risk-based view of the information needed to deliver suitable advice and good customer outcomes. For example, where a client wants to invest a lump sum into a diversified stocks and shares ISA, the information needed to determine suitability will often be limited to understanding their investment objective and timescale, their risk appetite and ability to bear risk. In contrast, more complex scenarios such as recommending a non-mainstream asset via a SIPP will require more extensive information gathering.
The FCA emphasises that firms need a reasonable basis for determining that a recommendation is suitable and do not need to carry out a comprehensive review of a client’s needs and circumstances to determine optimal solutions.
Whilst the change from “necessary” to “sufficient” information is broadly welcomed, from a practical perspective this will increase the onus on firms to document their internal standards for what constitutes “sufficient” information across their different propositions.
Streamlined approach to knowledge and experience
The FCA proposes to clarify that firms do not always need to assess a customer's knowledge and experience before making a recommendation. This applies where the type of product the firm envisages recommending is one which the firm has reasonably identified as having a target market that includes clients with no experience of investing.
In practice, the FCA anticipates that the exception from the need to consider knowledge and experience will be most relevant to firms providing more limited scope advice services in relation to simpler, more common investments. The FCA also proposes to make clear that, where an assessment of knowledge is required, firms can educate and increase a client's knowledge as part of that process.
It is noted that under the proposals knowledge and experience assessments will remain necessary where the product is more complex or higher risk, or in all cases in the context of discretionary investment management services.
Attitude to risk and ability to bear losses
The consultation proposes consolidating the various terms currently used across MiFID, the Insurance Distribution Directive (IDD) and non-MiFID provisions, including ‘risk profile’, ‘risk tolerance’ and ‘preferences regarding risk taking’ into a single term: ‘attitude to risk’.
The FCA also proposes to clarify through Handbook guidance that firms are not required to use complex psychometric tools or detailed questionnaires to determine a client's attitude to risk. Whilst robust tools may be appropriate for comprehensive advice or larger portfolios, firms can be proportionate when considering attitude to risk, taking account of the nature and scope of the service provided and the risks of any products that may be recommended. Similarly, firms can take a proportionate approach when determining a client's ability to bear losses as part of assessing their financial situation.
More proportionate suitability reports
The proposals address the concern that firms currently prepare suitability reports as if they were compliance records, rather than client-facing communications. The FCA proposes that suitability reports should be concise and consumer-focused, providing clients with relevant information that clearly explains the recommendation, the reasons for it and any potential disadvantages. The length of the report should also be proportionate to the nature of the service and recommendation provided. New Handbook guidance will provide that a firm should ensure that a suitability report is concise and presented in a way that can be readily understood by a retail client.
Importantly, the FCA states that records demonstrating considerations, judgements and conclusions for compliance with the suitability rules should be retained separately from the suitability report.
Reliance on the Consumer Duty
The FCA proposes to delete certain COBS rules where the FCA believes Consumer Duty principles provide an appropriate degree of protection for retail customers. These include the requirement to assess whether alternative products would better meet the client’s profile, explicit rules prohibiting rules where nothing is suitable, and some communication-focused rules such as ensuring suitability reports are fair, clear and not misleading. This reflects the FCA's view that, taken together, the Consumer Duty requirements provide a comprehensive framework that makes several of the existing Handbook provisions redundant.
However, the FCA notes that consumers would not have a right to bring a private right of action claim (PROA) for breach of the Consumer Duty alone, though they would retain access to redress through the firm directly or via FOS complaints.
Consequently, if these proposals go ahead, firms will need to ensure that their Duty-based frameworks adequately cover areas previously addressed by the deleted rules, and consider the litigation and FOS risk profile under the new structure. Ultimately though, it should mean that the potential liabilities for firms offering limited scope advice under the revised rules will make it more commercially viable than under the current regime.
Retirement of FG17/8
The FCA proposes to retire the guidance on streamlined advice in FG17/8 and, in due course, publish updated case studies that help firms understand what it means to consider ‘sufficient’ information. Respondents to the earlier consultation indicated that FG17/8 was flawed and that consolidated guidance alongside the suitability rules in the Handbook would give them more certainty.
Charging and qualification requirements maintained
Notably, the FCA does not propose to change the adviser charging rules introduced following the Retail Distribution Review. Advice will still need to be paid via agreed-upon adviser charges rather than provider-paid commission or through cross-subsidisation. The FCA has considered arguments that this prevents commercially viable simplified advice, but on balance proposes to maintain the clear distinctions in the charging rules so as not to undermine the integrity of the UK advice market.
Similarly, the FCA does not propose to reduce the current qualification requirements for providing regulated advice. The Level 4 Diploma qualification remains an appropriate minimum standard. The FCA notes that the existing training and competency framework already provides flexibility, including permitting individuals who have started but not completed a Level 4 Diploma to provide advice under appropriate supervision for up to four years.
It seems the strong implication is that scaled, simplified advice models will most likely be delivered by larger, vertically integrated firms, platforms and banks (including through AI-enabled or automated channels), while many smaller IFA firms (including appointed representatives of networks) are likely to remain focused on full-scope comprehensive advice.
Key proposals: ongoing advice services
From Annual to Periodic suitability reviews
A significant proposal concerns the frequency of suitability reviews for ongoing advice services. Since MiFID II and IDD requirements were implemented in 2018, firms offering periodic suitability assessments have been required to review the suitability of investments at least annually. The FCA now proposes to remove this annual suitability review requirement.
Firms providing ongoing advice services will instead be subject to a more flexible obligation to conduct periodic suitability assessments and determine the most appropriate review frequency based on an assessment of customer needs and circumstances, in keeping with the Consumer Duty. This change is intended to give firms greater flexibility to design ongoing advice services that meet a wider range of consumer needs.
The FCA recognises that while an annual review might be right for many clients, there are situations where a client's needs could be met by less frequent reviews, particularly for younger consumers in the accumulation phase or those with simpler, low-risk investments. Removing the mandated annual review requirement could lower costs for consumers who may otherwise be priced out of ongoing services and free up adviser capacity. This creates greater flexibility for tiered and tech-enabled ongoing service models but places the onus on firms to justify review frequencies and demonstrate fair value.
Charging for ongoing related services
The FCA proposes to clarify that firms can offer and charge for services related to advice, on a one-off or ongoing basis, whether or not they give a new personal recommendation on each occasion. These could be services that relate to investments previously purchased by the client following an earlier personal recommendation. In line with the Consumer Duty, firms will still need to ensure these related services meet an identified need of customers in the target market, provide fair value and are clearly described (scope, content, frequency, costs and cancellation rights). Under the proposals firms will also be required to expressly distinguish between instalments of initial advice (which must stop once the upfront cost is repaid) and; genuine ongoing service charges.
Disengaged clients
The FCA proposes to introduce new Handbook guidance clarifying its expectations as to how firms should fulfil their existing Consumer Duty obligations when dealing with clients who are not engaging with ongoing services. The FCA does not propose prescriptive rules on the treatment of disengaged clients. Instead, the guidance is intended to give firms more clarity on the FCA's expectations whilst allowing firms flexibility to design processes suitable for their business models.
The FCA expects firms to have policies for what to do when client disengagement means they are not receiving the service they are paying for, including stopping collecting fees for ongoing services. The regulator plans to work with industry to publish examples of good and poor practice. If the proposals go ahead, firms will need to design and document clear disengagement processes, appropriate MI and fee-stopping triggers.
Discussion chapters: legacy trail commission and professional clients
Legacy trail commission and other commission
The consultation includes two discussion-only chapters. The first invites views on whether the FCA should consider changes to its rules on pre-RDR legacy trail commission paid to advisers. The FCA is not at this stage proposing a change to these rules but wants to better understand the impact of paying legacy trail commissions on consumers. Potential options could include maintaining existing arrangements unchanged, enhancing transparency, or introducing a sunset date on these payments.
The second discussion-only chapter looks at commission in non-advised distribution of alternative investments (such as VCTs and EISs), where platform providers must rebate commission to clients but some execution-only brokers may retain it, creating an uneven playing field and potentially inconsistent outcomes. One suggestion is to allow platforms to rebate commissions from those alternative investments on the same basis as authorised fund managers.
Professional client suitability standards
The consultation also invites views on the suitability requirements that should apply to advice provided to professional clients. In the draft rules, the FCA proposes for now to apply the new rules to services provided to professional clients in broadly the same way that current rules apply to such services.
What is not changing
The FCA is not proposing to reduce the qualification standards for regulated advice, viewing the Level 4 Diploma qualification as an appropriate minimum standard and an important safeguard for consumers. The FCA also proposes to maintain the charging rules introduced following the Retail Distribution Review (RDR), meaning advice will still need to be paid via agreed-upon adviser charges rather than provider-paid commission or through cross-subsidisation.
Key implications for firms
The consultation represents a significant evolution in the FCA's approach to regulating financial advice. Firms should consider the following implications:
Opportunity for innovation: The proposals are expressly designed to give firms confidence to develop different business models and provide more cost-effective access to simplified forms of advice. Firms that have previously been deterred from offering limited scope advice due to perceived regulatory risk may wish to reconsider their positioning.
Cultural shift required: The move from ‘necessary’ to ‘sufficient’ information and the emphasis on proportionality represents a shift towards outcomes-based regulation. Firms will need to make judgements about what constitutes sufficient information in different scenarios, rather than defaulting to comprehensive information gathering. The Ombudsman Service will similarly need to make judgements about how firms have conducted their business.
Suitability report review: Firms should review their current approach to suitability reports. The FCA is clear that reports should be concise and consumer-focused, not designed as compliance records. This may require firms to separate their client-facing communications from their internal compliance documentation.
Ongoing service propositions: The removal of the annual suitability review requirement offers firms flexibility to design tiered ongoing service propositions with different review frequencies and corresponding fee structures. Firms should ensure that any changes to service design are consistent with Consumer Duty obligations regarding fair value and consumer understanding.
Disengaged client policies: Firms should review their policies and procedures for identifying and dealing with disengaged clients. Continued charging without meaningful delivery of service is likely to breach Consumer Duty obligations.
Legacy commission arrangements: Firms receiving legacy trail commission should monitor developments closely. Whilst no changes are proposed at this stage, the discussion chapter signals that the FCA is actively considering whether to consult on reforms in this area.
Close engagement with the FCA: The FCA has emphasised the importance of close collaboration during the consultation period and beyond. Firms are encouraged to respond to the consultation, and the FCA has indicated that it will engage with stakeholders representing consumers and industry during the consultation period.
Next steps
The FCA welcomes feedback on the draft rules and questions in this consultation by 22 May 2026. The FCA will consider feedback and aims to publish a Policy Statement in Q4 2026, though this depends on the extent of feedback received.
The FCA has also confirmed that it remains committed to consolidating, simplifying and clarifying existing guidance on the advice guidance boundary and will consult on changes in due course.
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