CP26/10 Simplifying the FCA Handbook

The FCA’s latest consultation paper CP26/10 is another clear signal that the regulator is continuing its shift toward a more flexible, outcomes-based advice framework, underpinned by Consumer Duty and supported by smarter, data-led supervision.

For regulated retail financial services firms, this is not simply a technical rule review. It is part of a wider FCA strategy to modernise retail advice, improve consumer engagement and encourage firms to innovate while still evidencing suitable outcomes and robust governance.

The most immediate operational change is the proposed move away from mandatory annual suitability reviews toward periodic suitability reviews. This provides firms with more flexibility in how they structure ongoing servicing models, but it also increases the importance of evidencing why review frequencies remain appropriate for different client segments.

Compliance officers therefore need to focus on several key themes:

• Client segmentation and service differentiation
  Firms will need clearly defined servicing models supported by documented rationale, governance and MI. If firms are moving away from annual reviews, they must evidence why this still delivers good consumer outcomes under Consumer Duty.
• Consumer engagement and dormant clients
  The FCA has specifically highlighted expectations around clients who are not engaging with ongoing advice services. Firms will need stronger audit trails showing attempts to contact clients, service usage, suitability triggers and fair value assessments.
• Suitability governance
  Despite the flexibility proposed, suitability obligations remain central throughout PROD and COBS requirements. The FCA is effectively saying firms may modernise delivery models, but suitability standards are not being diluted.
• Data and regulatory reporting
  The consultation introduces enhanced reporting expectations within RMAR reporting tied to investment activity and client categorisation. This reinforces the FCA’s wider transition toward becoming a data-led regulator where firms must aggregate, validate and evidence high-quality management information continuously rather than periodically.
• Affordable and scalable advice
  The FCA repeatedly references proportionality, innovation and removing barriers to advice delivery. Firms that can operationalise lower-cost advice models safely and consistently are likely to gain strategic advantage.

Importantly, the FCA also acknowledges that firms will need to make more judgments within an outcomes-based framework and that the Financial Ombudsman Service will inevitably assess those judgments retrospectively. That means defensibility becomes critical.

This is where RegTech becomes increasingly important.

Many retail firms still operate supervision using fragmented spreadsheets, manual file reviews and inconsistent audit methodologies. That operating model becomes difficult to defend when firms are expected to evidence ongoing suitability, Consumer Duty monitoring, vulnerable customer outcomes and service segmentation at scale.

Platforms such as Model Office enable firms to automate large parts of this governance burden through continuous audit workflows, suitability review tracking, Consumer Duty dashboards, training and competence oversight and real-time MI aggregation across advisory businesses.

The wider message from CP26/10 is relatively straightforward. The FCA is prepared to give firms more flexibility, but only where firms can demonstrate strong governance, accurate data, consistent oversight and measurable consumer outcomes.

For compliance teams, the challenge now is less about interpreting rules in isolation and more about building operational defensibility across the entire advice lifecycle.

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