Advice quality monitoring At the centre of the FCA’ s work in the protection space at present is a simple question- are customers receiving quality advice that meets their needs? Advice quality therefore is not only a regulatory priority, but the strongest indicator for a firm they are achieving good customer outcomes. This is where Navigator adds value, by providing a centralised system for recording advice, monitoring adviser activity and T & C oversight.
Navigator allows the firm to monitor client outcomes in an accessible way with integrated outcomes of file reviews which should give visibility of adviser advice patterns. This should allow firms to produce the relevant file review MI that their recommendations are made in the client’ s best interests. In turn this should make it easier to identify trends, such as unnecessary policy replacements or bias towards certain providers. With vulnerable customer monitoring this could mean firms can build additional safeguards are built into the advice process where needed.
Commissions: A key FCA concern Commission is a standard method of payment for many advisers, but the FCA is concerned that some commission structures could lead to poor outcomes. In particular, the FCA is looking at incentives linked to commission size or volume. These can encourage advisers to recommend products that pay higher commissions, rather than those that best suit the client.
AT THE CENTRE OF THE FCA’ S WORK IN THE PROTECTION SPACE AT PRESENT IS A SIMPLE QUESTION- ARE CUSTOMERS RECEIVING QUALITY ADVICE THAT MEETS THEIR NEEDS?
While clawbacks are supposed to discourage mis-selling, the FCA questions whether they really work in practice. Clawback can sometimes become an issue because of remuneration models. Poor commission structures can lead to issues like unnecessary re-broking, if firms reward advisers with bonuses or other incentives tied to how much they sell, this could push advisers to put sales and unnecessary re-broking before customer outcomes, suitability of advice and overall advice quality. These are the outcomes the FCA wants to prevent.
Measures that firms can incorporate are tools that assist in the effective comparison of policies, monitor KPIs such as persistency, cancellations, and replacement business to identify potential issues at both adviser and firm level. This MI will allow the firm to investigate any concerns related to short policy durations or repeated re-broking to ensure advice remains in the client’ s best interests.
10 | PROTECTION ADVISER | AUTUMN 2025 |