On 25 March 2026, the FCA published CP26/10: Simplifying the Pensions and Investment Advice Rules. Among its proposals is one that will fundamentally reshape how advisory firms deliver ongoing services: the removal of the mandatory annual suitability review.
This is not a minor procedural adjustment. For firms whose service models, client agreements, fee structures, and compliance-monitoring frameworks are built around a fixed annual cycle, the shift to a periodic, needs-based review model poses a significant operational and strategic challenge. It also presents a genuine commercial opportunity.
In this article, we explain what the FCA is proposing, why it matters, what firms should be doing now, and where the opportunities lie.
Why This Proposal Matters
The mandatory annual suitability review was introduced with sound intentions: regular contact, regular reassessment, regular documentation. In practice, it produced something rather different — a compliance ritual, performed on a calendar schedule, driven by regulatory prescription rather than genuine client need.
The FCA’s own multi-firm review of Ongoing Financial Advice Services in February 2025 made the scale of the problem visible. Firm practices for handling disengaged clients varied widely, raising concerns that some firms may be failing to meet their Consumer Duty obligations. A subsequent adviser survey in December 2025 found that approximately 4% of consumers (around 0.3 million) had not been engaged with at all in the prior year, and 33% (around 2.8 million) had been engaged only once.
That is not a client engagement problem alone. It is a structural problem with a model that treats all clients identically, regardless of their circumstances, complexity, or appetite for contact. CP26/10 is the FCA’s response, and most profoundly, finally enables firms to adapt their proposition to best meet client needs and deliver good customer outcomes in a commercially effective way.
What the FCA Is Proposing
CP26/10 proposes to replace the mandatory annual suitability requirement under COBS 9A.3.9R and COBS 9A.3.10R with a periodic review obligation under a new consolidated COBS 9C framework. The FCA states:
“We propose to remove the annual suitability requirement… Firms providing an ongoing advice service 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, and in keeping with the Consumer Duty.”
— FCA, CP26/10, Chapter 3: Ongoing Advice Services
This is not deregulation. The duty of care remains intact. What changes is who decides how often a review is needed, and on what basis. The FCA is moving from a rules-based frequency requirement to a principles-based, outcomes-focused one. That shift in responsibility lands squarely with the firm.
The IDD and MiFID Consolidation
A related but often overlooked element of CP26/10 is the consolidation of COBS 9 and COBS 9A into a single chapter, COBS 9C. Currently, suitability requirements differ depending on whether the advice relates to MiFID business, insurance-based investment products under the Insurance Distribution Directive (IDD), or other life policies and pensions. Firms advising across product types operate parallel compliance processes to manage these distinctions.
Under COBS 9C, those distinctions are largely removed. A single suitability framework applies across product types, with unified language around risk assessment — the FCA proposes a single “attitude to risk” concept, replacing the inconsistent references to “risk profile”, “risk tolerance”, and “preferences regarding risk taking” that currently sit across MiFID, IDD, and non-MiFID provisions. For firms with mixed books of business, this consolidation is operationally significant and should inform how the periodic review model is implemented across the client base.
Practical Implications for Firms
Contractual Exposure
Most client agreements in use today contain an explicit commitment to an annual review. That commitment is not just a regulatory statement — it is a contractual one. Removing or amending it requires client notification and, in many cases, formal variation of terms. Many firms will have existing contracts that envisage annual suitability reviews, and adjustments required should firms wish to change the frequency. Firms should review their entire client agreement suite aligned to any propositional changes and consider a structured remediation and communication programme for these agreements as necessary. A common barometer used as the basis of refunds for the sector’s work into past ongoing service failings is – what level of service was contracted with the client? Whatever firms decide, this will need to be clear and delivered effectively going forward. If anything, a variety of review cycles is perhaps more challenging to control and oversee.
Client Preference and Choice
A significant practical question CP26/10 raises is what happens when a client actively wants an annual review. The removal of the mandatory requirement does not prohibit annual reviews — it simply removes the obligation to provide one to every client on a fixed cycle. Firms will need a clear policy on how they handle client preferences. Where a client requests or expects an annual review, the firm should document that preference, incorporate it into the service agreement, and ensure the fee structure reflects the level of service delivered. Consumer Duty obligations around consumer understanding reinforce this — clients should understand what service frequency they are receiving, why and how they can engage with firms should they require something different.
Event-Based Review Triggers
The shift to a periodic model means firms must determine what triggers a review. This is the operational heart of the new framework. Credible triggers might include:
- Life events — retirement, bereavement, divorce, inheritance, change of employment, or health diagnosis
- Significant market movements — where portfolio performance deviates materially from expectations or benchmarks
- Changes in circumstances — a shift in risk appetite, a change in income, or a new financial objective
- Product-driven triggers — an annuity rate review date, the end of a fixed term, or a platform change that affects fund availability
- Regulatory or tax changes — where new legislation materially affects the suitability of the existing arrangement
Firms will need to define, document, and embed these triggers into both their advice processes and their CRM and workflow systems. The ability to evidence that a review was conducted at the right time, for the right reason, will be a core compliance requirement.
Consumer Duty Fair Value
Firms that reduce review frequency without a corresponding adjustment to ongoing fees will face direct scrutiny under Consumer Duty fair value obligations. The FCA has been clear that ongoing charges must be justified by the service actually delivered. A firm that moves from annual to biennial reviews while maintaining the same fee structure will need to demonstrate — with evidence — that the service provided is commensurate with the fee charged. A full review of value assessments and pricing structures across all service tiers is a prerequisite for any service redesign and implementation.
Compliance Monitoring and Technology
A fixed annual cycle is, paradoxically, one of the easier things to monitor. Every client gets a review; every review gets a risk-based file check. A more bespoke periodic model is more sophisticated and demanding to manage. Compliance monitoring frameworks will need to be refocused around client risk segmentation, review triggers, and outcome-based MI.
The technology implications are material. CRM systems will need to support configurable review schedules by client segment, trigger-based workflow alerts, and reporting that evidences why a particular client was reviewed at a particular time. Back-office systems designed around fixed annual cycles will require reconfiguration. Firms should assess their technology capability now — not after the Policy Statement.
The Disengaged Client Problem
The FCA’s finding that firm practices for handling disengaged clients vary widely creates a specific challenge under the new framework. Under a mandatory annual model, a firm could document the attempt and move on. Under a Consumer Duty-aligned periodic model, the question becomes sharper – what does the firm do for persistently disengaged clients, and is charging an ongoing fee in their absence defensible?
The FCA expects firms to have policies for managing disengaged clients, which should include stopping the collection of fees for ongoing services where the client is not receiving the service they are paying for. CP26/10 proposes introducing new Handbook guidance on how firms should meet their existing Consumer Duty obligations in these circumstances — it will not create new standards, but it will align expectations. Firms will need a clear, documented policy covering escalation points, fee suspension triggers, and evidence of proactive outreach.
The Commercial Opportunity
Not everything about this change is a compliance burden. The removal of the annual prescription creates genuine scope to design tiered service propositions — annual, biennial, or event-driven — that better reflect the actual needs of different client segments.
A retired client with a stable drawdown portfolio has different review needs from a business owner approaching exit, which in turn differ from those of a younger accumulation client in a model portfolio. Pricing those services differently, and evidencing the value of each tier, is both commercially sensible and aligned with the FCA’s stated goal of enabling advisers to offer a broader range of ongoing advice services, with a range of fees to meet different clients’ needs.
Firms that move quickly to redesign their propositions — segmenting client bases, defining service levels, and aligning fees to demonstrable value — will be better placed commercially and regulatorily than those that wait for final rules before acting.
What Firms Should Be Doing Now
The consultation closes on 22 May 2026. The FCA aims to publish a Policy Statement in Q4 2026. That gives firms roughly six months before final rules are confirmed — but it does not give firms six months to prepare. Service model redesign, contractual remediation, and rebuilding the compliance framework are not projects that can be completed in the weeks following a Policy Statement. The groundwork needs to start now.
- Consider what propositional enhancements would best service your clients, target market and client segments. Assess what proportion of clients might receive better value from an alternative service.
- Audit client agreements for annual review commitments and assess the potential scale of contractual remediation required.
- Conduct a Consumer Duty fair value assessment across all service tiers to ensure ongoing charges remain defensible under a revised review model.
- Define event-based review triggers and build a client segmentation framework that maps review frequency to client needs and complexity.
- Assess CRM and back-office technology capability to support configurable review schedules, trigger-based workflows, and outcome-based MI reporting.
- Map compliance monitoring frameworks against a risk-based periodic model and identify gaps in file review processes.
- Develop a disengaged client policy that includes escalation points, fee suspension triggers, and evidence of proactive outreach.
- Review the IDD and MiFID implications for firms with mixed books of business, ensuring the new unified framework is applied consistently.
- Consider responding to the consultation by 22 May 2026 — the FCA has asked specific questions about how firms currently operate ongoing review services, and industry input will shape the final rules.
Responding to the Consultation
The FCA’s specific questions cover their proposal ‘to remove the annual suitability requirement’ – an area where your firm’s experiences carries weight.
Responses can be submitted online via the FCA’s CP26/10 response form or in writing to the Advice Policy Team at 12 Endeavour Square, London E20 1JN, or by email to cp26-10@fca.org.uk — the deadline is 22 May 2026
How Square 4 Can Help
At Square 4, we help firms move from regulatory awareness to regulatory confidence. We are already working with advisory firms to assess the impact of CP26/10 on their service models.
Our support includes:
- Consumer Duty fair value assessments aligned to revised service propositions
- Ongoing service proposition redesign including client segmentation and tiered review frameworks
- Compliance framework reviews to support the transition from fixed annual cycles to risk-based periodic models
- Client documentation programmes including agreement audits and remediation planning
- Governance, risk management and controls design to support firm effectively monitor ongoing service delivery quality and fulfilment.
If you would like to discuss any of the contents of this article in more detail or how Square 4 can help your firm. Please get in touch with Luke Wootton (Client Relationship Director) lwootton@square4.com, or Simon Goryl (Advisory Director). sgoryl@square4.com.
Dean Ritchie – Consultant
