FCA consultation response
Our response to CP26/10
Submitted to the Financial Conduct Authority on 12 May 2026, ten days ahead of the 22 May consultation deadline. Public, in full, downloadable.
12 May 2026
Submitted
22 May 2026
Consultation closes
9 questions
Q7-10, Q15-16, Q22
Public
In full, no redactions
Why we are publishing this
CP26/10 will reshape how IFA firms service the long-tail client segment. The proposals are correct in direction. They formalise the proportionate service model that the economics of modern adviser firms require. They close the loophole of charging disengaged clients without demonstrable ongoing value.
Pillar designed its operating model from the ground up for the regulatory environment CP26/10 describes. We have responded in full, on the questions where we have direct operational experience, with evidence from the live deployment at Paterson Financial Planning.
We are publishing the response in full because the industry needs to see it. Adviser firms can use it, cite it, push back on it, or build on it. That is how a consultation should work.
What the response covers
Q7: Frequency of ongoing reviews
We support replacing the mandatory annual review with a needs-based cadence. We flag that the binding constraint will be the evidence burden, not the frequency choice, and that risk-averse firm cultures will struggle with the operating-model change.
Q8 and Q9: Proportionality and segmentation
We ask the FCA to explicitly confirm that white-label, non-advice, outsourced review delivered under data-processor governance is a legitimate route to proportionate service.
Q10: Charging for related services
Strong support for paragraph 3.8. We ask for a worked example of a non-advice related service delivered by a third party, and explicit confirmation that the adviser firm can pay the third party directly.
Q15 and Q16: Disengaged clients
The single most important Consumer Duty clarification in the consultation. We connect it directly to the FCA's 16 April 2026 distribution chain observations and ask for guidance confirming that reasonable re-engagement steps can be delivered by non-advice third parties under documented principal oversight. We propose a safe harbour definition of the trigger for the re-assessment obligation.
Q22: Cost-benefit analysis
The CBA underestimates firm costs because it assumes in-house build. It also does not model the principal-firm oversight cost demanded by the 16 April distribution chain observations. We supply pilot data from Paterson FP: 20 reviews, 15% escalation rate, £11,000 of escalation revenue in April 2026.
The 16 April observation matters
On 16 April 2026, the FCA published Consumer Duty Board Reports observations stating that "monitoring of outcomes in distribution chains was often weak, especially where firms rely on intermediaries or outsourcing partners". The same observation confirmed that firms cannot delegate any part of their Duty responsibilities to third parties.
Read alongside CP26/10, this gives the industry a clear instruction. The principal firm cannot delegate the duty. It can delegate the execution, provided the audit-trail evidence is principal-firm-grade and the oversight is documented.
Outsourced review models that do not produce evidence to that standard will fail supervisory scrutiny. Models that do, will not. That is the test our response asks the FCA to make explicit in the final policy.
Download the full response
Sixteen pages, including Exhibit A (Consumer Duty mapping) and Exhibit B (April 2026 pilot data). Free to share, cite, and forward.
Download the response (PDF)Related reading
CP26/10: the bigger hook IFA firms haven't seen yet
Why the consultation makes proving ongoing value harder, not easier.
CP26/10 and periodic reviews: what IFA firms need to know now
The deeper read on what shifting from annual to periodic reviews actually requires.
Your annual review file wouldn't survive a Section 165 request
What good evidence actually looks like.
Brian McLaughlin is co-founder of Pillar Client Services, a structured review outsourcing service for UK financial advice firms. Reach him at brian@pillarcs.co.uk.
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