The FCA’s CP26/10 and the shift to flexible reviews

Rethinking suitability reviews: why flexibility, fairness and consumer understanding must be at the heart of future advice models

The FCA’s latest consultation, CP26/10, marks one of the most significant shifts in the advice landscape for more than a decade. The regulator is seeking to simplify and modernise how pensions and investment advice is delivered in the UK, with one of the headline changes being the proposed move away from mandatory annual suitability reviews toward a more flexible, needs‑based approach.

Given how widely annual review cycles have been embedded in current practice, this represents a meaningful shift. It recognises that financial planning is not linear, that client needs vary widely, and that advice must be genuinely aligned to an individual’s circumstances rather than a one size fits all requirement.

The case for change in the review cycle

The challenge with the current annual review requirement is that it does not always reflect the reality of a client’s financial journey. Many advisers and firms have long argued that the annual cycle can feel arbitrary, sometimes generating activity for its own sake and encouraging a tick box approach rather than meaningful engagement. The FCA’s consultation directly acknowledges this issue, noting that firms should instead assess suitability based on “sufficient” information and apply proportionate, flexible processes.

There are, however, times when annual reviews are essential. A client approaching retirement, for example, will often experience rapid shifts in needs and risks. Annual assessments, or more frequent ones, help ensure pension pots remain on track, investment strategies stay appropriate, and income drawdown sustainability is monitored. This period also involves a major psychological transition from accumulation to decumulation, where an adviser’s soft skills, reassurance and steady guidance become just as critical as technical expertise.

Equally, there are instances where an annual review adds limited value. A 23‑year‑old who has just joined a workplace pension scheme and has minimal investable surplus is unlikely to need an in‑depth yearly assessment. Their circumstances may remain largely unchanged for several years.

A rigid annual requirement overlooks this diversity and can unintentionally dilute the quality of interactions by forcing uniformity where flexibility is needed.

What flexible suitability reviews could unlock

1. Higher quality, more meaningful reviews
   Less frequent but more targeted reviews have the potential to improve outcomes. When a client’s situation remains stable for extended periods, annual reviews can become formulaic. A more flexible approach would allow advisers to conduct deeper, more insightful reviews when they are genuinely needed, capturing richer detail and supporting clearer client understanding. This aligns with the FCA’s intent to streamline and reframe communications so that suitability reporting becomes more concise, consumer focused and proportionate.

2. Truly personalised advice journeys
   The consultation explicitly aims to empower firms to align advice services with client needs, allowing them to move from fixed annual assessments to periodic reviews based on circumstances. This shift places greater responsibility on advisers to assess need, materiality and timing. It also encourages firms to redesign processes and use data intelligently, which industry leaders have pointed out is essential to widen access to advice without undermining consumer protections.

3. Fair value assessments and the charging question
   If the market shifts toward less frequent suitability reviews for some clients, firms will need to reassess fee structures. A fixed 1 percent annual charge linked to annual servicing may no longer represent fair value if reviews are conducted every two or three years.

   But this issue is nuanced. Adviser and client relationships often extend far beyond formal reviews. Adviser availability during turbulent markets, proactive check ins, reassurance calls and ongoing monitoring all have real value and must not be overlooked. The FCA has made clear it is not proposing changes to adviser charging rules in CP26/10, but firms will still be expected to evidence fair value. Thoughtful, transparent tiering of service menus will therefore be vital.

4. Evolving service menus to reflect life stages
   Many firms already operate tiered service menus, but these may need to become more dynamic. A flexible regulatory framework creates an opportunity to evolve service propositions so that they adapt to life stages and financial journeys. A client moving from growth to retirement income, for example, may shift up the service tiers temporarily to reflect the level of support required.
   
   This is also central to maintaining trust, particularly as simplified advice grows. CP26/10 is explicitly designed to stimulate innovation in the simplified advice space for more straightforward needs, without diminishing the importance of full advice for more complex circumstances.

How Huntswood sees the opportunity

At Huntswood, we believe the proposals in CP26/10 present a meaningful opportunity for firms to improve consumer outcomes while simultaneously reducing unnecessary friction in the system.

There is growing recognition that good customer outcomes depend on advice that is both high quality and well timed. A more flexible review regime has the potential to:

• support consumers more effectively across life stages
• align adviser effort with genuine need
• mitigate the risk of perfunctory or box ticking reviews
• enable pricing structures that better reflect value delivered
• enhance customer experience through more relevant and empathetic touchpoints

But this opportunity also carries risks that firms must manage. The FCA, industry commentators and advice professionals have all highlighted the potential for consumer misunderstanding, especially if the boundary between simplified and full advice is not clearly communicated. Similarly, while flexibility is welcome, the Financial Ombudsman Service’s future interpretation of “appropriate review frequency” will likely shape firm appetite for change.

What firms should consider next

To prepare for the potential shift to periodic reviews, firms should begin assessing:

• how review frequency could be risk based and personalised
• how suitability processes and documentation may need redesign
• how value assessments will change under flexible servicing models
• what governance and oversight frameworks are needed to protect consumers
• how adviser training should evolve to reinforce soft skills during life stage transitions
• how to communicate clearly with clients about what they should expect

The future of advice will be shaped by those who adapt early, build robust frameworks and put consumer understanding at the centre of their model.

Supporting clients the right way at the right time

Above all, the adviser community must continue to support clients at every stage of their journey. CP26/10 is not about removing safeguards. It is about enabling flexibility, improving clarity and ensuring that the right level of service is provided at the right moment, for the right fee.

As the conversation develops, Huntswood will continue to guide firms through the regulatory expectations, operational implications and consumer duty considerations that sit behind these proposals. The outcome should be a system that works better for consumers and advisers alike.