10.6 Monitoring and Reviewing Client Circumstances

One-Off Advice vs Ongoing Service

The first question for an adviser at the end of a recommendation is whether the service is one-off or ongoing. The distinction has significant regulatory consequences:

A firm cannot charge an ongoing adviser charge without providing an ongoing service. COBS 6.1A.41R makes it clear that an ongoing charge must be supported by an ongoing service, typically an annual review with a renewed suitability assessment.

Triggers for Periodic Review

A review may be triggered by agreed review dates (for example, an annual review agreed at outset) or by life events that change the client's circumstances. Common life events that should trigger a review include:

• Marriage, civil partnership or cohabitation.
• Divorce, dissolution or separation.
• Birth or adoption of a child.
• Death of a spouse or dependant.
• Redundancy, change of employment, or significant income change.
• Illness or disability affecting earning capacity.
• Inheritance or other significant capital receipt.
• Approaching or entering retirement.
• Moving house or downsizing.

A client who experiences any of these events should be encouraged to contact their adviser; equally, an adviser providing an ongoing service should be alert to life-event triggers and proactively contact the client.

Review Frequency

COBS 16.5 does not fix a single frequency for ongoing suitability reviews — it requires reviews to be regular and appropriate to the client's circumstances. In practice, the most common review cycle is annual, but a review may be more frequent for a client with a complex portfolio or rapidly changing circumstances. The frequency should be agreed with the client at the outset of the ongoing service and confirmed in the suitability report.

COBS 16.5 — Ongoing Suitability

COBS 16.5 applies to firms that provide a continuing personal recommendation service to retail clients. The rules require:

1. Regular reviews of the client's circumstances and the suitability of the recommended investments.
2. A review of the client's agreed investment strategy at least once during a 12-month period, taking into account the client's attitude to risk, capacity for loss, and any changes in circumstances.
3. A suitability report for each review, explaining the new recommendation or confirming that the existing arrangements remain suitable.
4. A clear explanation of the charges for the ongoing service and how the client can cancel it.

The Ongoing Suitability Report

The ongoing suitability report does not have to be as detailed as the initial suitability report, but it must:

• Summarise the client's current circumstances (from the updated fact-find).
• Identify any changes since the last review.
• Confirm whether the existing recommendations remain suitable or whether changes are recommended.
• Explain the reasons for any new recommendation.
• Include the charges for the ongoing service.

Fact-Find Updates

A fact-find is not a static document. It must be updated whenever the client's circumstances change. The updated fact-find is the foundation of the ongoing suitability assessment — without it, the adviser cannot demonstrate that the recommendation remains suitable.

A good practice is to:

• Send the client a copy of the existing fact-find before the review meeting.
• Ask the client to confirm or update each section.
• Document any changes in writing and obtain the client's confirmation.
• File the updated fact-find with the review suitability report.

Changing Products

Where a review identifies that the existing product is no longer suitable, the adviser must consider whether to recommend a change. The same suitability rules apply to a recommendation to change as to an initial recommendation — COBS 9 and, where relevant, COBS 9A and 9B. The adviser must also consider:

• Exit charges and penalties on the existing product (for example, early surrender penalties on a life policy).
• Tax consequences of the change (for example, capital gains tax on a disposal outside an ISA).
• Loss of guarantees — for example, guaranteed annuity rates, lifetime allowance protection, or with-profits guarantees.
• The cumulative cost of the change, including initial and ongoing charges on the new product.

A recommendation to change a product must be in the client's best interests. A firm that recommends frequent changes to generate charges — a practice known as churning — is in serious breach of PRIN 6 and PRIN 8 and may face FCA enforcement.

Legacy Product Reviews

A legacy product is a product the client already holds that was sold before the current advice relationship, often under different regulatory rules (for example, before the RDR). Advisers have a duty to consider whether legacy products remain suitable and whether the client would benefit from a review. Key considerations include:

• Charges — older products may carry high annual charges that no longer represent fair value under the Consumer Duty.
• Guarantees — older pension and with-profits products may contain valuable guarantees that should not be given up.
• Features — for example, life funds with market value reductions, or pension contracts with protected tax-free cash ages.
• Target market — under PROD 4.3, the firm must consider whether the legacy product remains within the manufacturer's target market for the client.

PROD 4.3 Distribution Review Obligation

PROD 4.3 also requires distributors to review distribution arrangements regularly. This includes:

• Monitoring whether the products being recommended continue to meet the needs of the target market.
• Identifying any products that are causing harm or poor outcomes for retail clients.
• Taking action where a product is no longer suitable — including raising the issue with the manufacturer or, in serious cases, ceasing distribution.

Practical Review Cycle

A typical annual review cycle for an ongoing investment client looks like this:

1. Pre-review — send the client the existing fact-find and request updates.
2. Review meeting — discuss changes in circumstances, objectives and risk tolerance.
3. Analysis — assess whether the existing portfolio remains suitable; consider legacy products.
4. Suitability report — confirm or recommend changes; document the reasoning.
5. Implementation — execute any recommended changes, with clear disclosure of charges.
6. Record-keeping — file the updated fact-find, suitability report and any new product documentation.

The CeMAP candidate should be able to explain why ongoing reviews matter, identify the triggers that should prompt an out-of-cycle review, and recognise that an ongoing charge without an ongoing service is a regulatory breach.