The FCA has set out what it's calling a more "purposeful, predictable and proportionate" approach to supervising financial advisers. These three words sound like typical regulatory speak, but buried in the announcement are specific changes that will affect how you run your practice and where the FCA will focus its attention.
Let's break down what this actually means.
What's Changing in FCA Supervision
The regulator has signalled a shift away from reactive, case-by-case enforcement toward a more systematic approach. In practical terms, this means:
Purposeful – The FCA wants to focus resources on areas where it sees the greatest risk of consumer harm. For advisers, this means less time spent on box-ticking exercises that don't relate to client outcomes, and more scrutiny on areas the FCA considers high-risk.
Predictable – The regulator is committing to clearer expectations. Rather than discovering what the FCA wanted after an enforcement action, firms should have a better understanding of requirements upfront. This includes more specific guidance on what good looks like.
Proportionate – Smaller firms won't face the same supervisory intensity as large institutions. The FCA acknowledges that a three-adviser practice shouldn't be treated the same as a major wealth manager.
The Priority Areas You Need to Know
The announcement highlighted several focus areas. Two stand out for IFAs:
Investment Culture
The FCA is looking closely at how firms approach investment recommendations. This isn't just about suitability – it's about the broader culture around how investment decisions are made and documented.
Questions to ask yourself:
- Do your advisers have genuine freedom to recommend the most suitable products, or are there subtle pressures toward certain solutions?
- How do you document the rationale for investment recommendations?
- Can you demonstrate that client outcomes drive your investment process?
Financial Crime Controls
This one catches some advisers off guard. You might think financial crime is mainly a concern for banks and payment providers, but the FCA expects all authorised firms to have proportionate controls.
For a typical IFA practice, this means:
- Robust client identification and verification procedures
- Awareness of fraud risks, particularly around pension transfers and vulnerable clients
- Staff training that goes beyond a tick-box annual module
- Clear escalation procedures when something looks wrong
Bereavement Handling Under the Microscope
The FCA is also reviewing how firms handle bereaved clients. This is an area where poor processes cause real distress.
Consider your current approach:
- How long does it take to process a death notification?
- Do bereaved family members have to repeat information multiple times?
- Are your staff trained to handle these conversations sensitively?
The regulator hasn't set specific timescales yet, but the direction of travel is clear. If your bereavement processes are clunky or slow, now is the time to fix them – before the FCA mandates specific requirements.
Transfer Times: Expect New Standards
The announcement also flagged transfer time reforms. While details are still emerging, the FCA has long been frustrated by delays in pension and investment transfers.
Current industry standards suggest most transfers should complete within 10 business days, but the reality often falls short. If you're on the receiving end of transfers, document any delays caused by ceding providers – this evidence may become valuable if the FCA introduces stricter requirements.
If you're the ceding provider, audit your transfer-out processes now. How long do transfers actually take? Where are the bottlenecks?
What This Means for Your Compliance Approach
The shift to "proportionate" supervision is welcome, but it comes with a catch. The FCA expects smaller firms to take more responsibility for their own compliance rather than relying on regulatory hand-holding.
Practically, this means:
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Document your reasoning – Not just what you did, but why. If the FCA queries a decision in three years, you need to show your thinking at the time.
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Focus on outcomes – Process compliance matters less than whether clients are getting good results. Review your client outcomes data regularly.
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Stay current – The FCA expects firms to keep up with regulatory developments without waiting for direct communication. Subscribe to FCA updates and actually read them.
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Review your promotions – With the FCA's increased focus on financial promotions (they made 120 takedown requests to social media platforms in a single week recently), every piece of marketing material needs scrutiny.
The Bottom Line
The FCA's new approach isn't revolutionary, but it does signal where enforcement attention will land. Investment culture, financial crime controls, bereavement handling, and transfer times are now explicitly on the radar.
The firms that will navigate this well are those that treat compliance as ongoing practice improvement rather than annual box-ticking. The firms that will struggle are those waiting for the FCA to tell them exactly what to do.
Start with your highest-risk areas. Review your investment recommendation process. Check your financial crime controls are more than theoretical. Time your transfer processes. Fix the problems you find before a supervisor does.
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