The FCA is simplifying the rules, but the bar for advice quality is rising

There has been a noticeable shift in tone from the FCA over recent weeks. Fewer new layers. More focus on making existing rules clearer and more effective.

That does not mean expectations are easing. If anything, the message is sharper.

The regulator appears less interested in firms navigating complexity for its own sake, and more focused on whether advice is genuinely suitable, well evidenced, and clearly understood by clients.

This week’s announcements span insurers, investment participation, financial crime, complaints handling, and ESG transparency. They may look disconnected. They are not.

Together, they point to a single direction of travel. Simpler frameworks, but stronger accountability for outcomes.

Here is what matters, and what it means for advice teams building and reviewing recommendations day to day.

 

Simplifying insurer rules, and what that signals for advice

The FCA has confirmed plans to simplify elements of its rules for insurers, with the aim of lowering costs and supporting innovation. Money Marketing covered this here: https://www.moneymarketing.co.uk/news/fca-to-simplify-its-rules-for-insurers/

While aimed at insurers, this has direct relevance for advice firms. Insurer costs and risk appetite shape product design, pricing, and availability. Over time, this feeds straight through to client outcomes.

More importantly, it signals something broader. The FCA is willing to remove complexity that does not improve consumer protection.

Advice firms should be asking the same question of their own processes. Where has complexity crept in that does not strengthen suitability or client understanding?

From an advice perspective, complexity should earn its place. If a justification exists only to defend a process, rather than explain a recommendation clearly, it is worth revisiting.

 

Encouraging investment engagement, without weakening suitability

The FCA has also reiterated its aim to improve the UK’s investment culture, encouraging broader participation while maintaining standards. Professional Paraplanner reported on this here: https://professionalparaplanner.co.uk/fca-to-boost-uk-investment-culture/

This matters for advisers supporting clients who may feel hesitant, cautious, or disengaged from investing altogether.

More participation does not mean lighter suitability. It means better explanation, clearer objectives, and advice that is easier for clients to understand and challenge.

This is where the role of a Suitability Consultant becomes particularly relevant. It is a role we developed to sit between advice construction and compliance oversight. The focus is on testing and evidencing suitability before advice is finalised, not reviewing it after the fact.

In practical terms, Suitability Consultants challenge assumptions, validate recommendation logic, and ensure the advice stands up on its own merits. Not because regulation demands it, but because clients deserve clarity.

 

Financial crime, proof now matters as much as intent

The FCA has launched a new firm checker to help consumers verify authorised firms and avoid scams: https://www.fca.org.uk/news/press-releases/fca-launches-firm-checker-fight-financial-crime

This sits alongside sobering data. Around 800,000 people reported losing money to investment or pension related scams in the year to May 2024.

For advice firms, this reinforces an uncomfortable truth. Clients often struggle to distinguish between regulated advice and fraud, until it is too late.

Good intentions are not enough. Firms need clear, documented processes that show how clients are protected. That includes identity checks, scam warnings, and how those conversations are evidenced.

From a suitability standpoint, being able to demonstrate what happened, when, and why, is becoming non negotiable.

 

Complaints reporting, simpler mechanics, same expectations

The FCA has also simplified the complaints reporting process: https://www.fca.org.uk/news/news-stories/fca-simplifies-complaints-reporting-process

This is a practical improvement. Less administration, particularly for smaller firms.

What has not changed is the FCA’s expectation that complaints data is meaningful. Complaints remain one of the clearest indicators of where advice processes break down.

Viewed through a suitability lens, complaints often trace back to unclear objectives, misunderstood risk, or recommendations that were not fully anchored to the client’s circumstances.

Simpler reporting removes noise. It puts the focus back where it belongs, on learning and improvement.

 

ESG ratings, clarity over claims

Finally, the FCA has set out proposals to regulate ESG ratings providers: https://www.fca.org.uk/news/press-releases/fca-proposals-esg-ratings

This reflects growing concern about inconsistency and vague claims in sustainable investing.

For advisers, ESG is firmly a suitability issue. It requires clear documentation of client preferences, an honest assessment of how products align, and transparency about limitations.

Suitability Consultants spend a growing amount of time here, stress testing whether ESG claims are properly evidenced, not assumed. This is exactly where future complaints and regulatory scrutiny will focus.

 

The bigger picture

Across all of these updates, the FCA’s message is consistent. Reduce unnecessary complexity, but raise expectations around clarity, evidence, and outcomes.

For advice firms, this is not about adding more checks. It is about building suitability into the advice process from the outset, so files stand up without explanation or repair.

Clear objectives. Defensible logic. Plain English. Evidence that speaks for itself.

If this reflects what you are seeing in your firm, or the direction you feel the industry is heading, we would genuinely love to hear from you. No pitch, just people who understand the realities of delivering good advice.