Why Removing Annual Suitability Risks Burying the UK’s Fee-for-No-Service Reckoning
By Steve Conley
Academy of Life Planning
A trustworthy regulator does not erase the audit trail when the bill is about to fall due.
A quiet proposal with loud consequences
The Financial Conduct Authority is consulting on removing the requirement for annual suitability reviews for advisers, replacing it with a more flexible obligation to conduct “periodic” reviews based on an assessment of client need and aligned to the Consumer Duty.
On the surface, this sounds reasonable.
Even progressive.
But history teaches us that what is removed matters more than what is promised to replace it.
This proposal arrives at a very particular moment — one in which the UK advice sector is carrying a large, unresolved legacy risk that has already exploded elsewhere.
To understand why this matters, we need to revisit what happened in Australia — and why it has not happened here.
The scandal that never quite happened in the UK
In Australia, regulators confronted a systemic failure known as “fee for no service”.
The issue was simple:
- Ongoing advice fees were charged
- Ongoing advice was not delivered
- In some cases, fees continued to be deducted from the accounts of deceased clients
The response was not rhetorical.
It was structural.
- Regulators treated fee-for-no-service as automatic misconduct
- Remediation was programmatic, not complaint-led
- Compensation ran into billions
- Business models collapsed or were forced to reform
The lesson was clear:
If a fee is taken, a service must be delivered — or refunded with interest.
In the UK, the same charging structures existed.
The same incentives operated.
The same failures were visible in plain sight.
But the reckoning never fully arrived.
A liability that did not disappear — it simply remained latent
For years, UK advisers deducted ongoing fees under “ongoing service” propositions that were, in practice, inconsistently delivered or not delivered at all.
The evidence has been publicly available:
- Clients paying thousands annually without reviews
- Long gaps with no contact
- “Availability” substituted for service
- Performance narratives masking absence of engagement
Legally, the position is straightforward:
- Fees taken without service are recoverable
- Redress includes interest and lost growth
- Liability compounds over time
Scaled across:
- Large vertically integrated firms
- Millions of clients
- A decade or more
…the numbers become systemic.
This is not conjecture.
It is arithmetic.
Why annual suitability became the system’s load-bearing beam
The annual suitability review did not exist because consumers love paperwork.
It existed because it provided:
- A clear service anchor
- A visible entitlement to an ongoing fee
- A clean audit trail
- An enforceable standard
It answered a simple question:
What did the client actually receive this year in exchange for the fee deducted?
Remove that anchor, and the system does not become more caring.
It becomes less testable.
“Periodic suitability” and the risk of retrospective justification
The proposed replacement — “periodic suitability based on assessed client need” — shifts the evidential burden in a subtle but profound way.
Instead of:
- A scheduled, client-visible review
We move to:
- Internal assessments
- Firm-defined triggers
- Retrospective explanations
- Consumer Duty narratives
This creates a familiar pattern:
“We assessed that no review was required.”
The fee, however, continues.
This is not hypothetical.
It mirrors precisely how fee-for-no-service persisted historically.
The advice gap that isn’t what it claims to be
Much of the justification for flexibility rests on the idea that:
- Some clients have “small pots”
- Their circumstances are “unlikely to change”
- Annual reviews are therefore unnecessary
This framing deserves scrutiny.
First, it is the client that needs review, not the pot.
- Life events do not scale with asset size
- Smaller buffers often mean greater vulnerability, not less
- Employment, health, family, housing, and stress drive need — not portfolio value
Second, the so-called “advice gap” is often a sales gap in disguise.
- The issue is not lack of need
- It is lack of profitability under an asset-based fee model
When support is uneconomic, the system redefines the problem.
If the FCA truly wanted an NHS-style model, the path is already clear
The FCA frequently invokes healthcare analogies:
- Prevention
- Proportionality
- Targeted intervention
But an NHS-aligned wealth model would not rely on evergreen fees.
It would:
- Empower most people to self-manage with the right tools
- Provide one-to-one professional support during stress or transition
- Separate education and empowerment from specialist intervention
- Prohibit ongoing charges where no active service is delivered
This model already exists.
It is the model used by:
- Planning My Life (self-directed empowerment)
- Financial Life Coach (episodic, needs-based support)
- The Academy of Life Planning more broadly
What it does not do is support rent extraction from inertia.
Why this moment matters
Removing annual suitability without simultaneously banning ongoing fees absent service does not modernise advice.
It:
- Weakens the clearest consumer protection
- Obscures historical accountability
- Allows legacy risk to decay quietly
- Shifts enforcement from prevention to hindsight harm
The risk is not that the UK repeats Australia.
The risk is that it never corrects what Australia already proved was unsustainable.
A question, not an accusation
So here is the question that now sits at the centre of UK advice regulation:
Can an ongoing adviser fee remain justified when no time-bound, client-visible service is delivered?
If the answer is yes, then fee-for-no-service has not been solved — it has been normalised.
If the answer is no, then flexibility must be paired with automatic fee suspension, explicit service definitions, and client-controlled triggers.
Anything less is not reform.
It is forgetting.
Closing reflection
Financial advice will not mature into a profession until:
- Fees are inseparable from service
- Empowerment replaces dependency
- Structure supports trust, rather than relying on it
History has already shown us where the alternative leads.
The question now is whether the UK learns — or quietly looks away.
Academy of Life Planning 