FCA to progress its review of Model Portfolio Service (MPS) firms this year

On 4 March 2026, the Financial Conduct Authority (FCA) published its annual Regulatory Priority report for consumer investments and confirmed that it will progress its review of Model Portfolio Service (MPS) firms in 2026 as part of its regulatory priorities.

The FCA first announced its intention to undertake a multi-firm review of MPS in February 2025 “to provide confidence that investors are receiving good outcomes from MPS and share good practice on how firms are doing this.”

The MPS market has grown considerably in recent years, with 43% of advice firms outsourcing to an MPS provider in 2025. The growth in the use of MPS is largely being driven by the increased regulatory challenges faced by advisors, in particular the Consumer Duty, which has increased ongoing monitoring and reporting requirements. One of the benefits of using an MPS is that advice firms can leverage specialist investment expertise without adding to their internal expenses, which can deliver greater efficiency, as well as better value for money and outcomes for clients. However, this is only possible if advisory firms select MPS firms that satisfy the specific needs of their clients.

The purpose of the multi-firm review is to look at how MPS providers:

• Implement the Consumer Duty, in particular emphasising fair value, appropriate products, and good consumer outcomes, to ensure they are central to MPS design.
• Monitor whether MPS produce the intended results for investors.
• Assess the fees charged by MPS, to ensure that charges are justified and communicated clearly to clients.

In their Regulatory Priority report, the FCA acknowledged there has been significant consolidation and rapid firm growth in parts of the consumer investment sector, including MPS providers. If controls do not keep pace with growth, risks can emerge. Firms therefore need robust systems and controls to manage those risks, whilst keeping the interests of consumers central to their plans.  The FCA says that it will progress its review of MPS firms this year and assess whether the Consumer Duty rules and requirements remain appropriate. The FCA is also expecting firms to act promptly to address emerging risks, including signs of inadequate financial resources, and to assess new technologies and products to ensure good consumer outcomes and strengthen financial resilience through stress testing and contingency planning.

Key Takeaways

In anticipation of the FCA's review, financial advisors may want to review their due diligence on MPS providers to ensure their investment strategy and charges align with the Consumer Duty. Communications with clients should also be reviewed to ensure that it has been clearly explained to clients why an MPS provider meets the objectives and risk appetite of the client.  Finally, financial advisors should also ensure they have adequate record keeping demonstrating their compliance with the Consumer Duty.

Once the FCA has completed their review, we can likely expect new FCA guidance on MPS governance, as well examples of good and bad practice.

To read the FCA's Regulatory Priority report, please click here.