On October 7, 2024, the FCA published a Dear CEO letter to firms whose primary business is financial advice or investment intermediation. The letter sets out a summary of the FCA’s priorities, its expectations of those firms, and the work it intends to do.

The FCA highlights the important role played by financial advisers and investment intermediaries in helping consumers to make complex financial decisions, but notes that most people do not access traditional channels of support. It explains that this presents opportunities for firms to grow and serve new markets, as well as posing challenges and risks which could lead to harm to consumers and the market.

To address these, the FCA wants to work with the industry to ensure consumers receive consistently good outcomes from a sector which is sustainable and well placed for the future, whilst also empowering more consumers to manage their finances.

FCA priorities

In light of this, the FCA explains that its priorities over the next two years are to:

• reduce and prevent serious harm, with a focus on retirement income advice, ongoing advice services, ensuring the “polluter pays”, and consolidation;
• monitor and test higher industry standards under the Consumer Duty – it warns that CEOs should be able to evidence their firm has implemented the Duty and complies on an ongoing basis;
• enable more consumers to pursue their financial objectives through the Advice Boundary Guidance Review – the FCA encourages firms to actively engage with it on the review and consider the opportunities it may provide to better support their clients.

The FCA plans to underpin these priorities with:

• Increased industry engagement and collaboration across the UK, including through in-person events and keynote speeches, with the aim of gaining insights into the issues and challenges firms are seeing, helping shape the future regulatory proposals, and sharing the FCA’s expectations.
• A forward-looking and data-led approach, with the aim of maximising the power of data within the sector. As part of its engagement, the FCA plans to proactively seek views on what insights would be most useful to share from the data it has access to from firms across the sector, with a focus on data that is easily accessible to minimise the burden on firms. The FCA expects to follow up by issuing a survey to firms in 2025 to obtain these insights and aims to start retiring the collection of less valuable data.

Updates and next steps

Key updates set out in the letter include:

• The FCA is following up with firms on the findings of its thematic review of retirement income advice and carrying out further work to explore the scale of any issues identified and tackle any harms. It intends to publish further commentary on the retirement income advice market in Q1 2025.
• Having written to several firms earlier in 2024 requesting information about their delivery of ongoing advice, the FCA aims to provide a further update later in 2024 on its findings and next steps.
• The FCA expects CEOs to ensure their firms and any appointed representatives they oversee hold adequate financial resources to meet potential redress liabilities, and must not seek to avoid redress liabilities. It expects to outline its next steps on its Capital Reduction for Redress consultation (CP23/24) before the end of 2024.
• The FCA plans to undertake multi-firm work to review consolidation within the market.

CEOs are expected to review the letter and consider how it applies to their firm, and the FCA reminds them that as CEO or Director, they are responsible for ensuring their firm meets FCA requirements.