UK Financial Conduct Authority Publishes Dear CEO letter for Financial Advisers and Investment Intermediaries

The U.K. Financial Conduct Authority has published a Dear CEO Letter setting out its supervisory strategy for financial advisers and investment intermediaries. The FCA's priorities over the next two years are reducing and preventing serious harm to consumers who rely on financial advice, monitoring and testing higher industry standards under the Consumer Duty, and enabling more consumers to pursue their financial objectives through the Advice Guidance Boundary Review.

The FCA will focus on the following:

• retirement income advice - firms should use the findings from the FCA's thematic review of retirement income advice, as outlined in its previous Dear CEO letter, to review and update how they work. The FCA intends to publish further commentary on the retirement income advice market in Q1 2025;
• ongoing advice services - the FCA is concerned firms may not be adequately considering the relevance and costs of these services for all clients and that some clients are being charged for services that are not delivered. The FCA aims to provide a further update on its work later this year;
• polluter pays - the FCA expects firms and any appointed representatives they oversee to hold adequate financial resources to meet potential redress liabilities. Where firms cannot meet their liabilities upon cancellation of their authorization and accountable individuals seek to move to another firm, the FCA will seriously question their fitness and propriety to hold a role that requires FCA approval. The FCA expects to outline its next steps on its Capital Deduction for Redress consultation, which proposes to require personal investment firms to set aside capital for potential redress liabilities at an early stage, before the end of this year; and
• consolidation - the FCA plans to undertake multi-firm work to review consolidation within the market. Where acquisitions complete without prior regulatory approval, the FCA may use its enforcement powers to object to the transaction or initiate criminal proceedings.

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