FCA shoehorning and CIPs — what the regulator looks for in 2026

The shoehorning concern is the simplest to state and the hardest to defend against. The FCA's worry is that a firm builds a CIP because it's operationally efficient — and then quietly forces every client through it whether the standard solution suits them or not. The CIP becomes the answer to every question, and the suitability work becomes a tickbox confirming what the segmentation already decided.

What follows is the regulator's stated position, how it has hardened over a decade, and what a defensible CIP actually looks like at the documentation level.

Where the concern was first set out — TR16/1

The FCA's Assessing Suitability: Research and due diligence of products and servicesthematic review (TR16/1, March 2016) is the foundation document. Two findings are worth quoting in spirit if not verbatim. First, the regulator found firms operating CIPs that were poorly documented, inconsistently applied, and insufficiently reviewed. Second — and this is the shoehorning point — the regulator was concerned that firms with a CIP had a financial and operational incentive to recommend the CIP solution irrespective of whether a non-CIP solution would have been more suitable.

The remedy TR16/1 set out wasn't to abolish CIPs. The regulator accepted that centralisation has client benefits — consistency, scale economies, reproducible research. The remedy was that firms must evidence, at the individual client level, that the CIP solution was suitable for that client, and must operate a working exception process for clients where it wasn't.

What's changed since

The concern hasn't softened. It has been overlaid by three further regulatory developments that all push in the same direction.

PROD 4 (Product Governance for retail investment products), in force since 2018.PROD 4 puts product-governance obligations on both the manufacturer and the distributor. An IFA running a CIP is a distributor of the investment solutions inside it. The firm has to identify the target market for each solution and evidence that clients placed into the solution sit within that target market. Shoehorning a client into an MPS that wasn't designed for them is now a PROD 4 issue as well as a COBS 9.4 issue.

Consumer Duty (PS22/9), in force since 31 July 2023.The duty's "products and services" outcome and the cross-cutting rule on "avoiding foreseeable harm" both bite directly on CIP operation. The duty's higher standard of care makes the "we placed every client into the same solution" defence weaker than it already was.

The FCA's Retail Conduct supervisory work since 2024.The regulator has consistently flagged CIP discipline as a Dear CEO / supervisory priority area, with specific attention paid to ongoing-review evidence, exception-process usage, and outcomes data per segment. Firms that look like they default every client into the standard solution are now visible to the regulator in a way they weren't a decade ago.

The documentation checklist the regulator is likely to ask for

Based on what supervisory teams have been asking and what compliance consultants have been finding in s.166 reviews, the following sit at the top of the list:

• The CIP itself.One document, signed off by the board or equivalent, dated, with a review history. If the CIP exists as a folder of subordinate documents with no top-level statement, that's an immediate weakness.
• Client segmentation evidence per individual client.Each client should have a recorded segment assignment with the reasoning. "Balanced ATR, medium capacity for loss, accumulator, mass-affluent, no ESG preference — segment B." Not just a segment letter on a spreadsheet.
• Suitability evidence at client level, not segment level. The suitability report explains why the CIP solution fits this client, not why the segment fits the average client. The wording matters — a paragraph that reads "the firm's CIP recommends solution X for segment B clients, and you have been placed in segment B" is a shoehorning signal. A paragraph that reads "the firm's CIP recommends solution X for clients with your profile, because [client-specific reasoning]" is not.
• Working exception process.If the firm has a CIP and a population of, say, 600 clients, the regulator will expect to see a non-trivial exception rate. A CIP under which zero clients are exceptions, every quarter, is suspicious. A working exception process generates a steady trickle of cases where the standard solution wasn't recommended, with the reasoning documented.
• Investment committee minutes with substance.Decisions about adding, removing or retaining solutions, with the reasoning and the data behind each decision. A minute that records only "the committee reviewed the solution set and was content" is a weakness; the regulator's view is that the committee should be challenging itself, and the minutes should show the challenge.
• Per-segment outcomes data.Post-Consumer Duty, the firm should be able to produce performance and outcomes data per segment, against the segment's design intent, with commentary. The data informs whether the CIP's solution for the segment is still working.
• Ongoing review records per client.The annual review should explicitly check whether the client's circumstances have changed in a way that affects segment assignment, and whether the CIP solution still fits. A review record that doesn't address segmentation drift is a gap.
• Migration evidence where appropriate.When the CIP is updated and the change affects existing clients, the firm should evidence how it decided which clients to move, on what timetable, weighing costs against benefits.

The signals that flag shoehorning

From compliance consultants we work with, these are the recurring patterns that draw supervisory attention:

100% adoption.Every client in the CIP, no exceptions. Unrealistic.

Identical suitability wording across clients.The same paragraph copy-pasted across hundreds of reports, with only the client's name and ATR band changed. The FCA's view is that suitability is a per-client analysis; identical wording suggests the analysis isn't happening.

Segments that map suspiciously cleanly to commercial considerations.If the segment that pays the highest fee maps neatly to the in-house solution that captures the highest margin, the firm needs a strong evidential answer to "why is this in the client's interest?".

No change in segmentation over time.Clients' circumstances change. A client who was a balanced accumulator at 52 isn't always still one at 64. If your segmentation never moves anyone, your annual reviews aren't biting.

Investment-committee minutes that approve everything.A committee that's challenging the proposition produces a minute trail with some "no" and "needs more work" decisions in it. A rubber-stamp committee leaves no such trail.

What a defensible position looks like

The simplest framing: a defensible CIP is one where you could hand a sample of 20 client files to an independent reviewer and they could trace, for each one, the segment, the reasoning, the solution choice, the suitability fit, the ongoing review, and the evidence that the solution is still producing the outcomes the segment was designed to deliver. If the trail breaks at any step on any file, that's the work to focus on. The CIP itself is the easy part to write. The discipline of using it consistently across a real client book — and being able to evidence it — is the hard part.