UK regulator moves to streamline investment and pensions advice regime

The Financial Conduct Authority (FCA) is consulting on simplifying the pensions and investment advice rules (CP26/10, March 2026), with a view to boosting the diversity of the advice market and encouraging firms to offer more simplified forms of advice. Final rules are expected at the end of this year.

This consultation forms part of the regulator's "once in a generation" advice guidance boundary review, which seeks to modernise the advice and support framework. It sits alongside the introduction of targeted support, which aims to enable firms with the appropriate authorisation to make suggestions designed for groups of consumers with common characteristics. 

Reasons for reform

Firms have consistently told the regulator that they struggle to design commercially viable simplified advice models due to the perceived regulatory risk of doing so without considering a customer’s full circumstances. They have also indicated that they would like to tailor their ongoing services to reflect different consumer needs better, but feel limited by current regulation.

Although the regulator is clear about the importance of pensions and retail investments in allowing consumers to build wealth, and the role of advice in helping people make the most of their money, only a small proportion of adults in the UK receive regulated advice about their investments. The FCA's Financial Lives survey showed that only 8.6% of adults received regulated financial advice related to investments, saving into a pension or retirement planning in the year ending May 2024.

The FCA wants to simplify, consolidate and clarify its existing rules to address firms' concerns, encouraging them to develop simpler advice propositions which could benefit consumers. 

Simplifying the advice rules

The FCA proposes to consolidate and reframe the existing advice rules, while keeping intact the charging and qualification requirements introduced following the Retail Distribution Review in 2012.

The key proposals include:

• Merging the suitability requirements in the Conduct of Business Sourcebook (COBS) chapters 9 and 9A, which distinguish between MiFID (Markets in Financial Instruments Directive) and insurance-based investment products (9A) and other products (9), into a single framework (new COBS 9C).
• Replacing the requirement on advisers to consider "necessary" information when assessing suitability with the expectation that advisers consider "sufficient" information, better reflecting an outcomes-based approach through which different advice services, and different recommendations to different clients, can reasonably be supported by taking account of different information.
• Clarifying that firms do not always need to assess a customer's knowledge and experience before making a recommendation, where the type of product the firm envisages recommending is reasonably identified as having a target market that includes clients with no investing experience.
• Introducing a single concept of a client's "attitude to risk" (replacing varied references to "risk profile", "risk tolerance" and more), clarifying that firms do not need to use complex psychometric tools or detailed questionnaires to determine this, and confirming that firms can take a proportionate approach when determining a client's ability to bear losses.
• Consolidating the timing and content requirement of suitability reports for different types of business.
• Stripping out rules which are redundant following the introduction of the Consumer Duty.
• Retiring outdated non-Handbook guidance on streamlined advice (FG17/8) and embedding the helpful principles of proportionality directly into the Handbook, supported by updated case studies. 

The regulator is not proposing to change the adviser charging rules, or reduce the qualification standards for regulated advice. 

Ongoing services 

Proposals with respect to ongoing services include:

• Clarifying that firms can offer and charge for services related to advice, whether or not they give a new personal recommendation on each occasion, and for one-off or ongoing services relating to investments previously purchased by the client (following an earlier personal recommendation).
• Removing the annual suitability review requirement, replacing it with a more flexible requirement for periodic reviews at a frequency determined by the firm based on each client's needs and circumstances, and in line with the Consumer Duty.
• New Handbook guidance on how firms should meet their Consumer Duty obligations when dealing with disengaged clients, together with examples of good and poor practice.

Further topics for discussion 

The FCA is inviting initial feedback on further areas, with no specific rule changes proposed, in relation to its rules on commission payments, in particular legacy trail commission payable to advisers, relating to advised products bought before the end of 2012; and professional client suitability standards, with the regulator suggesting it may largely replicate the proportionate approach set out in the rules for retail customers.

Osborne Clarke comment

The regulator is signalling its desire to alleviate firms' regulatory burden and increase their flexibility rules to offer services which will benefit consumers. Firms are likely to welcome the simplification of the COBS suitability rules, which can be tricky to navigate, and the overall move towards more certainty, consistency and clarity in the rules on advice.

Businesses with large books of disengaged clients may wish to take the opportunity to review their process and policies for handling these clients in light of their Consumer Duty obligations.

Firms wishing to engage with the consultation, including with regard to the forward-looking discussion topics, should submit their responses to the FCA by 22 May 2026.

If you would like help exploring the impact of the proposed changes on your business, please contact our experts.