FCA proposes streamlined framework for pensions and investment advice

What does this mean?

The FCA is proposing to simplify and consolidate the pensions and investment advice regime to make it easier for firms to offer more proportionate, limited-scope advice and a broader range of support for consumers.  

The proposals do not include changes to adviser qualification requirements.

A single suitability framework 

A key proposal is to consolidate the existing suitability requirements in COBS 9 and COBS 9A into a single new chapter, COBS 9C. This would create one framework for suitability assessments and remove many of the current distinctions between advice on MiFID (Markets in Financial Instruments Directive) business, insurance-based investment products, and other life policies and pensions.

Clarity around proportionality

The FCA also proposes to clarify that suitability assessments should be proportionate. It would replace the requirement to consider “necessary” information with “sufficient” information, to make clearer that firms do not need to gather the same depth of information in every case. The consultation also proposes that firms should not always need to assess a retail client’s knowledge and experience before making a recommendation, where the relevant product’s target market includes clients with no prior experience of investing in that type of product.

Alongside this, the FCA proposes to simplify the language used in the rules when assessing investment risk. It would introduce a single “attitude to risk” concept, make clear that firms do not need to use complex tools or detailed questionnaires in all cases, and confirm that firms can take a proportionate approach when assessing a client’s ability to bear losses.

Interaction with the Consumer Duty

The consultation makes clear that the FCA wants to place greater reliance on the Consumer Duty across parts of the advice regime. It proposes to remove certain detailed COBS provisions where it considers the Duty already provides an appropriate degree of protection. 

The FCA also proposes to retire Finalised Guidance 17/8 on streamlined advice, incorporating the principles of proportionality within the FCA’s rules, and to provide updated case studies to illustrate proportionate approaches to suitability assessments. 

Suitability reports and ongoing advice

The FCA proposes to simplify and align suitability report requirements across business types, including when reports are required, their content and timing. In doing so, the FCA broadly seeks to preserve the current triggers for producing a suitability report while removing MiFID and non-MiFID distinctions, although it also proposes extending the requirement in some respects, including where the recommendation is not to take action. 

Reports would generally need to be provided before the transaction is concluded, subject to the existing distance-communication exception, and be concise, relevant and consumer-focused. They would need to explain the recommendation and its potential benefits, risks and disadvantages, while avoiding unnecessary repetition. The FCA also makes clear that suitability reports would not be intended to serve as the primary record of compliance.

For ongoing advice services, the FCA’s proposals are informed by findings from its 2025 multi-firm review. The FCA proposes replacing the current annual suitability review requirement with periodic reviews based on clients’ needs and circumstances. It also proposes clarifying that firms could charge for related ongoing services linked to an earlier personal recommendation, even where a new recommendation is not made each time. 

The FCA also proposes introducing new Handbook guidance on how firms should meet their existing Consumer Duty obligations when dealing with disengaged clients. It says the guidance would not create new standards, and that it plans to work with industry to publish examples of good and poor practice.

Topics for discussion: commission payments and professional clients

The consultation also seeks views on a small number of topics that are not yet at a formal consultation stage. Within this, the FCA is also consulting on a minor rule change to allow platforms to rebate commission received from alternative investment fund managers in the same circumstances as commission received from authorised fund managers.

The consultation includes a discussion of legacy trail commission arrangements and certain related distribution models. The FCA is seeking views on the consumer, firm and market impact of these arrangements, the barriers to reform, and whether any response is needed. It also considers commission in certain non-advised distribution models, including venture capital trusts (VCTs) and enterprise investment schemes (EISs).

The consultation also seeks views on what suitability requirements should apply to advice provided to professional clients. The draft rules broadly preserve the current position, but the FCA is asking for views on whether requirements should in future be better aligned to client type, the scope of the service provided, and the nature of the products recommended.

What do firms need to do?

Firms should review the FCA’s proposals and consider where they could have the greatest impact on existing advice and servicing models. This includes considering which customer segments, channels and propositions might support more limited-scope advice or differentiated ongoing service models, and where current processes may be more extensive than needed for the nature of the recommendation being made.

This could include mapping existing advice journeys, suitability processes and governance against proposed COBS 9C to identify where approaches could become more proportionate, but also where firms would still need robust evidence that the information gathered is sufficient to support the recommendation made.

Firms may also want to consider what information they already hold on consumers, whether this would be sufficient to support a simplified advice model, and whether there are any regulatory, legal or other practical barriers to using that information in this way.

The proposed changes could have wider operating model implications. Firms should assess which client segments, propositions and distribution channels may be most suitable for a more proportionate advice model, and the implications for controls, data, management information (MI), training and client communications. They should also consider how the proposed changes align with wider consumer engagement strategies, including the role of targeted support, and identify opportunities to develop more scalable, lower-cost advice propositions.

Next steps

The consultation closes on 22 May 2026 and the FCA will aim to publish a Policy Statement in Q4 2026