The FCA’s consultation on Simplifying the Pensions & Investment Advice Rules - Which? response

We welcome this consultation paper and support the Financial Conduct Authority’s (FCA) ambitions to enable an advice market that offers different types of support to meet differing consumer needs, at a cost they can afford, so they can make informed decisions to meet their financial objectives. We understand that to achieve this, changes may be needed to the existing advice rules to better enable firms to deliver more simplified forms of advice.
However, structural simplification must not come at the expense of consumer protection. Given the severe historical harms that have occurred in the advice sector - including high levels of unsuitable advice being given on defined-benefit pension transfers transfers - increased firm flexibility must be balanced with robust guardrails.
Moving from a ‘necessary’ to ‘sufficient’ suitability standard should not result in a lowering of the suitability standard. We support this proposed change, in principle, to give firms more confidence in conducting suitability assessments in ways that more closely match the complexity of the decision being advised on. However, firms could misinterpret this proposed change as a general lowering of the suitability standard, leading to inadequate fact-finding for holistic advice. Therefore we recommend that, before these rules are finalised, the FCA must:
- thoroughly evaluate the potential harm to holistic advice consumers
- assess the impact this proposal would have on the Financial Ombudsman Service’s (FOS) ability to adjudicate complaints relating to suitability
- publish, and receive feedback on, proposed detailed case studies for how this standard will be applied by firms in practice.

Firms should take a hybrid approach when developing ‘proportionate’ suitability reports. We agree that suitability reports should be consumer-focused. However, these reports are not just important for consumers at the time they receive a personal recommendation. They also serve as a vital audit trail if a consumer needs to seek redress at a later date. Therefore we recommend that the FCA encourages firms to develop a hybrid approach to suitability reports - combining a concise, consumer-friendly summary with a proportionate but more technical report to maintain future accountability and transparency.
Retiring some COBS rules and relying instead on the Consumer Duty could limit a consumer’s ability to pursue redress. Unlike COBS, the Consumer Duty lacks a Private Right of Action (PROA). Removing rules like COBS 9A.3.1R and 9A.3.1AR could therefore inadvertently limit consumers' legal avenues for redress, weakening overall protection. Therefore, we recommend that the FCA retains some of these explicit rules detailing firm responsibilities rather than relying solely on the Consumer Duty at this stage.
The shift from an ‘annual’ to a ‘periodic’ requirement for ongoing suitability assessments needs additional safeguards built in. Without guardrails, ‘periodic’ reviews risk becoming too infrequent, and this may result in consumers drifting into unsuitable positions that would otherwise be identified and addressed in a scheduled check-in. To mitigate this risk, we recommend that the FCA:
- introduces disclosure requirements for firms to explain their chosen frequency and what circumstances might trigger an earlier review.
- implement a maximum allowable gap between reviews. This could be an interim measure, until there is more certainty that firms are meeting the FCA expectations for this proposed change.

Download our full response here

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