The Association of British Insurers has expressed disappointment after the Financial Conduct Authority declined to consult on adviser charging rules as part of its broader effort to simplify investment and pension advice regulations.
The FCA is seeking to make it easier for companies to offer investment and pension advice, with the stated goal of making such services more accessible and affordable. The regulator said a more streamlined process could better serve consumers who do not require a full assessment of their financial circumstances.
As part of the proposed changes, the FCA said it would consolidate suitability frameworks into a single set of common rules and revise suitability communications to make them more concise and proportionate. The regulator also said it would give companies greater flexibility in how they design and deliver ongoing advice services, including a shift from fixed-annuity suitability reviews to periodic reviews based on individual client needs, AM Best reported.
The FCA added that it has begun discussions on updating rules governing trail commissions – payments made to advisers by insurers over the lifetime of an investment product – with the aim of modernising the framework and preventing potential consumer harm.
In a reversal from a previously outlined consultation scope, however, the FCA said it would not consider relaxing charging rules, such as those governing ongoing advice fees. The regulator said that updating those rules could allow providers and vertically integrated companies to offer free advice at the point of sale but warned that removing such requirements could create a competitive advantage for firms recommending their own products. It also said applying less stringent charging rules for simpler forms of advice would require a bespoke framework.
As a result, payments must continue to be based on agreed charges rather than provider-paid commission or cross-subsidisation, the FCA said. The regulator also confirmed that qualification standards for advisers would remain unchanged.
The FCA’s position comes as it advances parallel reforms aimed at widening access to financial support. From April 2026, firms will be able to provide so-called “targeted support”, allowing them to suggest products to groups of consumers with similar characteristics without delivering full personalised advice. The initiative forms part of the regulator’s broader Advice Guidance Boundary Review, which seeks to address the long-standing “advice gap” while maintaining appropriate consumer protections.
At the same time, the FCA has increased scrutiny of ongoing advice services, particularly where customers are charged recurring fees but may not receive corresponding value. This focus aligns with the regulator’s Consumer Duty requirements, which place greater emphasis on fair value, transparency and demonstrable outcomes for clients.
Chris Paskiewicz, policy adviser for conduct regulation at the ABI, said the decision risks curtailing options for both providers and savers.
“By not consulting on the adviser charging rules the regulator risks limiting how providers and savers could use the service,” Paskiewicz said in a statement. “We’ll continue to work with our members to respond to the regulator’s proposals.”
