In early 2026, a mid-sized London wealth manager with £50 million in annual revenue realized their legacy fee structures could not withstand the scrutiny of Year 2 Consumer Duty Board Reports. They engaged Compliance Consultant to conduct a peer benchmarking exercise and deploy a standardized Fair Value Assessment Framework to evaluate their ongoing advice charges. By isolating unevidenced trail commissions and restructuring their tiered pricing against market benchmarks, the firm secured defensible data for their SMF 16 to attest to fair value, eliminating a major regulatory vulnerability before their annual FCA compliance audit.
The situation in 90 seconds
The regulatory environment for UK wealth managers has shifted from a process-driven approach to an active, data-driven supervisory model. Under this updated approach, the Financial Conduct Authority (FCA) expects senior managers to prove that their clients receive tangible value for the fees they pay. Relying on historic agreements or generic service pledges no longer satisfies supervisory teams.
A prominent London wealth management firm, managing £50 million in annual revenue, faced severe operational strain under this supervisory shift. Their internal compliance function was overwhelmed by day-to-day regulatory maintenance, leaving little capacity to review their extensive book of legacy accounts. With their annual compliance audit approaching, the firm recognized that their historical fee structures were a major exposure point.
According to research from Royal London, 37% of adviser firms have changed their fee structure as a direct result of completing their initial Consumer Duty fair value exercises. For this London firm, the immediate priority was translating high-level regulatory expectations into an operational process. They needed to systematically review their charges, identify non-compliant fee arrangements, and establish a defensible pricing structure before their board had to sign off on the annual Consumer Duty report. Compliance Consultant was brought in to design and execute this restructuring program.
Why evidencing legacy value broke standard models
For decades, UK wealth management firms operated on fee structures that grandfathered legacy arrangements. When the FCA introduced the Consumer Duty rules, many firms attempted to apply standard compliance models to these legacy books. These standard models often relied on simple self-attestation, where advisers confirmed they provided "good service" without producing objective evidence of delivery. This approach failed to meet the regulator's expectation of active proof.
Our compliance consulting practice frequently observes mid-market firms struggling to bridge the gap between historic practices and modern data requirements. The firm's existing systems were built to track investment performance and transactional data, not compliance delivery. When subjected to the rigorous requirements of the Consumer Duty, these legacy models collapsed under the weight of unevidenced charges and poorly documented client interactions.
The data gap in ongoing advice
The core vulnerability for the firm lay in their ongoing service delivery records. Like many wealth managers, they charged an ongoing service fee (typically between 0.75% and 1.0% of assets under management) with the promise of an annual review. However, their internal systems did not maintain centralized records of whether these reviews actually took place, what was discussed, or if the client chose to decline the meeting.
This lack of structured management information represents a significant risk. Industry investigations from firms like KPMG indicate that the FCA is actively focusing on ongoing advice charges, specifically targeting firms that charge for annual reviews without delivering the service. The London wealth manager had no clear mechanism to match their billing records against actual client contact. This data gap meant that their SMF 16 compliance officer could not confidently sign off on the price and value outcome. For a deeper look at setting up active measurement systems, see our practical guide on how mid-sized firms can evidence Consumer Duty outcomes for FCA board reviews.
The trail commission liability
Beyond standard ongoing fees, the firm maintained a significant cohort of pre-2013 legacy accounts that still generated trail commission. These commissions were established long before the Retail Distribution Review (RDR) banned them for new business, yet they persisted on older insurance-wrapped pension products and investment bonds. Under the Consumer Duty, these payments are subject to intense regulatory scrutiny.
Recent research from NextWealth on trail commission and the value of ongoing advice highlights that the regulator has moved from asking "do you receive trail?" to demanding "can you prove these clients are getting value?" For the wealth manager, these legacy accounts often received the least active management, creating a direct conflict with the fair value rules. If a client is paying an ongoing trail fee but has not received an advisory contact or portfolio review in years, the firm is exposed to severe regulatory penalties and potential claims-chasing liabilities.
Deploying the benchmark and assessment framework
To resolve these vulnerabilities, Compliance Consultant deployed a structured restructuring methodology. The project began by separating the firm's client book into distinct cohorts based on fee structures, asset levels, and service agreements. This segmentation allowed us to isolate the high-risk legacy trail accounts and active client portfolios that lacked recent service evidence.
Once the accounts were categorized, we applied a systematic testing process to evaluate the value proposition of each service tier. This required a tool that could objectively weigh the cost of advice against the tangible benefits received by the client.
Applying the Fair Value Assessment Framework
The wealth manager utilized our proprietary Fair Value Assessment Framework, an advanced compliance toolkit designed to convert subjective value judgments into quantifiable data. This framework is available as a standalone digital product for £299, and it is also included as an exclusive benefit within our comprehensive Gold Retainer (Compliance Partner) tier. It is important to note that while our Silver Retainer (Compliance Professional) provides access to our core suite of digital templates, this advanced Fair Value Assessment Framework is reserved strictly for our Gold-tier partners or via standalone purchase.
Using the framework, the project team calculated the total cost of investing for each client group. This calculation went beyond the basic adviser charge to incorporate:
- Third-party platform fees
- Underlying fund manager charges (including transaction costs)
- Discretionary fund management fees
- The firm's own ongoing advice charges
By mapping these cumulative costs against the specific services delivered (such as tax planning, cash flow modeling, and scheduled reviews), the firm identified several client segments where the total cost was disproportionately high relative to the service received.
Mapping service delivery against peers
A critical step in the restructuring process was external peer benchmarking. A pricing model cannot be assessed in a vacuum; it must be evaluated against the broader market. We analyzed the wealth manager's pricing tiers against comparable mid-sized firms in London and the wider UK financial services market. This peer analysis revealed that their legacy percentage-based fees on smaller portfolios were significantly above market averages, with little service justification to back up the premium.
We also addressed the issue of cross-subsidization, where wealthier clients paying high percentage fees effectively fund the service of smaller accounts. While the FCA does not outlaw cross-subsidies or differential pricing, the price and value good practice update emphasizes that firms must demonstrate all groups of customers receive fair value. The benchmarking exercise helped the firm transition away from arbitrary percentage charges toward a transparent, hybrid pricing structure. To build and maintain these metrics over time, firms often integrate their systems with an evidencing Consumer Duty outcomes KPI dashboard template to maintain continuous data feeds.
Defensible data and board attestation
With the peer benchmarking complete and the fee structures adjusted, the firm had the defensible data required to secure board approval. The compliance officer could now present a clear audit trail to the directors. This audit trail showed exactly how the firm identified high-risk accounts, how it restructured unevidenced legacy fees, and how the new pricing tiers matched the service standards of the broader market.
Under the Consumer Duty, the annual board report is not a administrative formality. The board must actively challenge the business model, review management information, and sign off on a formal attestation of compliance. In past years, firms relied on soft, qualitative statements. In the current regulatory environment, the FCA expects hard metrics.
By utilizing our compliance consulting practice, the wealth manager turned a potential regulatory failure into a highly structured governance process. For our Gold Retainer clients, Compliance Consultant drafts the quarterly board compliance reports, directly presenting these structured metrics to the directors. This level of active oversight ensures that the board operates with complete visibility. To see how these reporting structures fit into a wider corporate governance framework, read our analysis of the lean governance framework for FCA board reporting packs.
Transferable lessons for mid-sized firms
The fee restructuring executed by this London wealth manager offers several clear lessons for other mid-sized financial services firms facing similar pressures under the Consumer Duty. Managing regulatory risk is no longer about maintaining static policy documents on a shared drive; it requires active operational adjustment and a willingness to reform legacy pricing.
For firms reviewing their ongoing adviser charging models, we recommend focusing on these four immediate actions:
- Unbundle your fee components: Dissect exactly what the client pays for platform services, fund management, and your advice to ensure the combined cost remains reasonable.
- Audit service delivery history: Match billing systems with CRM records to confirm that every client paying for an annual review actually received one.
- Review cross-subsidies: Ensure that smaller accounts are not paying high fees for services they do not use, and that high-net-worth clients are not subsidizing unprofitable relationships without clear disclosure.
- Transition legacy trail clients: Proactively convert pre-RDR legacy trail contracts into modern, transparent advisory agreements with defined service level agreements.
Our implementation philosophy at Compliance Consultant is built on turning complex regulation into practical, business-focused systems. As our founder states:
"I firmly believe that at the intersection of regulatory requirements, consumer rights, commercial viability and a social conscience there can be a great deal of good created for any synergistic relationship and the best alternatives are derived from understanding, competence, accuracy and honesty, combined with effective strategy."
If your firm is preparing for an annual compliance review or struggling to build a defensible data trail for your next board report, we can help. Book a free 30-minute discovery call to discuss how our Gold Retainer (Compliance Partner) can support your business with our Fair Value Assessment Framework, dedicated consultant access, and quarterly board report drafting. Contact us by emailing info@complianceconsultant.org with the subject "Retainer Discovery Call" or call our UK Freephone on 0800 689 0190.