Introduction
In June 2025 the Financial Conduct Authority (FCA) announced the launch of its Investment Advice Assessment Tool (“IAAT) to be utilised by the industry. This tool is intended to assist firms in the understanding of the FCA’s methodology in reviewing files of investment advice and enhance the industry’s understanding of what constitutes good investment advice.
This is not the first time the FCA has developed and released such a tool. In January 2021, the FCA introduced the Defined Benefit Advice Assessment Tool (DBAAT), which focused on the assessment of advice relating to defined benefit pension transfers. The FCA later released the Retirement Income Advice Assessment Tool (RIAAT), aimed at reviewing the suitability of retirement income advice, particularly in relation to drawdown and annuity recommendations.
The IAAT builds on the principles established by the DBAAT and RIAAT, forming part of the FCA’s broader drive to raise standards across all areas of retail investment advice and to support adherence to key FCA principles, such as COBS 9 (Suitability), PRIN 2A (Consumer Duty), and COBS 6 (Disclosure).
What does the IAAT look like?
As with the DBAAT and RIAAT tools, the IAAT comes in the form of an Excel spreadsheet with a number of different tabs and sections to be completed based on the investment advice being provided. It comprises six key sections:
- Information
- Suitability
- Insistent Client
- Disclosure
- Consumer Duty
- Results and Feedback
These sections adapt dynamically depending on the nature of advice entered. For example, tabs related to “Insistent Client” or “Consumer Duty” will become active based on earlier inputs, streamlining the assessment process and ensuring relevance.
Who is the IAAT for?
Although the FCA has not mandated the use of the IAAT, it has recommended its use by firms where there is a need to assess historic advice. This could be relevant, for instance, in the event of receiving complaints regarding investment advice or when undertaking a past business review. The IAAT is applicable to advice provided on or after 3rd January 2018.
Investment advice firms may also use the IAAT within their internal reviews to confirm that documentation, suitability assessments and disclosure practices are conducted in accordance with FCA rules, particularly COBS 9, COBS 6 and PRIN 2A.
Whilst the IAAT is primarily for investment advisory firms and will help them understand the FCA’s file review methodology, it will also be useful for other stakeholder groups that will benefit from the IAAT such as:
- Professional Indemnity Insurance providers;
- Compliance and legal professionals; and
- Trustees and sponsoring employers of defined contribution pension schemes.
These groups will gain improved insight into how the FCA assesses investment advice files, allowing them to align more closely with regulatory expectations.
The FCA has also produced a good instruction guide on how to use the IAAT, to ensure firms get the best usage out of this tool.
How Complyport can Help
At Complyport, we provide expert support to investment firms navigating regulatory requirements and advisory processes. We can help your Firm via:
- Suitability Review: We assess a sample of your firm’s investment or pension advisory cases and provide actionable feedback to enhance quality and consistency.
- Compliance and Investment Framework Assessment: Our consultants review your compliance and advisory structures to ensure alignment with the FCA’s expectations, including the principles of the Consumer Duty.
- Policy and Framework Implementation: We support firms in designing and implementing tailored compliance frameworks, policies and procedures to meet regulatory obligations.
- Training and Staff Engagement: We deliver focused training for compliance, legal and client-facing teams on implementing advice processes that satisfy FCA scrutiny and improve client outcomes.
Book a meeting with one of our Subject Matter Experts today to start preparing for the FCA’s new Investment Advice Assessment Tool and its implications for advice suitability and documentation standards.
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