The FCA’s thematic review: the outcomes

Posted 8 April 2024 by Graeme Stewart

The FCA has published its review of the retirement income advice market and whether clients are receiving appropriate advice on meeting their income needs in retirement. 

The FCA stated that its key aims were to gain an insight into how the retirement income market is functioning. It added that the timing of the review also gave it an opportunity to explore how firms were implementing the Consumer Duty.

As well as the thematic review, the FCA has also issued a Dear CEO letter about the review that details what the regulator expects from firms that provide retirement income advice as a result of it. It’s also published a Retirement Income Advice Assessment Tool (RIAAT) that has been developed for the purpose of the review to assess the suitability of advice files. The RIAAT has been published to help firms understand the FCA’s methodology for assessing advice files.

The outcomes

Client files were requested from 24 firms included in the desk-based review and considerable differences between firms in advice file record keeping were found:

  • 10 files (10%) were missing key documents, so could not be assessed.
  • 45 files (67%) were found to be suitable.
  • 7 files (11%) had concerns about suitability.
  • 15 files (22%) had material information gaps, so could not be fully assessed.

It was also found that not all firms were taking account of the differing needs of their customers in the decumulation phase: “We saw some examples of poor practice where some firms had not shown they had considered the needs of their customers or set out their advice model in a way likely to lead to good and consistent outcomes. We also found instances where some firms had not provided the right information to support their customers to make informed decisions.”

It also found that while many firms had given thought to the needs of vulnerable customers, they were not always implementing these processes in an effective manner.

Actions for firms

The review includes some anonymised examples of good and poor practices in order to support firms.

Firms providing retirement income advice should also refer to the questions in the Retirement Income Advice Survey and take immediate steps to review whether they have appropriate MI and update their data collation processes and records accordingly.

Doing this should help firms make sure they have effective governance of their business and improve oversight of client outcomes in line with the requirements of the Consumer Duty. It may also help firms better respond to regulatory requests for information. 

The quality of cashflow modelling

In addition to publishing the review, the FCA has published an article that sets out its concerns around cashflow modelling. It says harm could be caused if firms:

  • Don’t give consideration to how clients will understand the output
  • Project forward using returns that aren’t justified
  • Don’t consider the inputs and outputs objectively

It also discusses how firms can improve the way they use cashflow modelling when it comes to data usage, using justifiable future rates of return, information about charges and communications.


The flurry of activity in this area of the market shows how quickly the FCA is applying its expectations under the Consumer Duty. This will require firms who are active in this area of the market to take some time out to read the publications and understand what actions they may want to take going forward.

The FCA says that retirement income advice remains a focus for them, and they will be following up their thematic review more generally in the retirement income advice market.

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Graeme Stewart

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Graeme Stewart