The UK’s Financial Conduct Authority (FCA) has written to a number of financial advisory firms asking for information about the provision of ongoing services, for which their clients continue to be charged after advice.
In its survey, the FCA asks whether firms have assessed their ongoing services in response to the introduction of the Consumer Levy and whether they have made changes as a result.
It also asks for data on the number of clients whose current suitability of advice needs to be reviewed as part of the service, how many received this review and how many paid for ongoing advice but were refunded as the suitability assessment did not occur.
The FCA is collecting this information to assess what, if any, further regulatory work it may undertake in this area. The FCA expects to provide a further update having taken account of firms’ responses.
About 20 of the largest consulting firms receive the survey, so as to achieve the broadest possible understanding of market practice. Their selection is not based on particular concerns with these companies.
The regulator had said it would undertake some business-to-business work in this area in a letter sent in December 2022. In it, the FCA expressed concerns that advisory firms did not take sufficient account of the relevance, nature and cost of these ongoing services for all their customers.
A further letter sent in January 2023 explained how advice firms should approach the inbound consumer duty, reminding firms that it requires firms to act in good faith towards clients, avoid causing them foreseeable harm and enable and support them to pursue their financial goals.