So, the moment of truth has arrived, when firms have done all they can before the Consumer Duty deadline. Or so it is hoped.
The Financial Conduct Authority’s recently published results of its survey of firms’ preparedness show a significant degree of planning:
- 95% in the ‘advisers and intermediaries’ category said meeting the Duty requirements is a high priority for their organisation
- 100% said they understood board and management responsibilities
- 98% said they will comply with most or all of the requirements of the deadline.
Are these figures too good to be true?
I don’t think so. Planners in the UK already have to comply with the highest standards of regulation of any market in the world, and the way advisers engage in Personal Finance Society events like the Festival of Financial Planning, or with continuing professional development events up and down the country, shows customer outcomes are very much front of minds.
The cross-cutting rules of the Consumer Duty are demands that have been made on advisers for decades
When I talk to people involved in professional bodies in other countries, they tell me that not only are their regulatory standards lighter than the UK but that the role of a planner often does not even exist in their jurisdiction.
Frequently, they feel the need to preface any description of how things work in their market with, ‘It’s not like the UK…’
The cross-cutting rules of the Consumer Duty – acting in good faith, avoiding foreseeable harm and enabling clients to pursue their financial objectives – are demands that have been made on advisers for decades, and have been enforced by not only the most powerful regulator but also the most independent arbitrator in the world.
The other thing that makes these figures ring true is the areas where advisers are less likely to give overwhelmingly positive answers. For example, 36% of advisers said they had not yet completed the task of working ‘across the supply chain to ensure our partners have the information necessary for them to meet their obligations under the Duty’.
Advisers are more often likely to be consuming information than producing it
Why would advisers be less likely to say they had completed this aspect? I think the answer underlines the key role of advisers in the success of the Consumer Duty.
As the FCA has said, “the adviser can often also have the clearest oversight of the customer’s overall position and an overview of the total proposition”. In other words, advisers are more often likely to be consuming information than producing it.
Most advisers had only just received all the information from providers they needed to confirm an ‘overview of the total proposition’, and so it makes sense that many still had – or have – work to do on this task and gave an honest assessment of where they were.
Another vital point across all firms was a request for further guidance on outcomes monitoring ahead of all the other aspects of the Consumer Duty. Given that one of the original aims of the Duty was, in the FCA’s own words, to create ‘clarity for consumers and firms’, this is a key task.
The Consumer Duty is an opportunity to demonstrate what clients already know – that financial planners live up to internationally high standards in their day-to-day work. As a profession, I believe we are very close to completing this challenge.
Matthew Connell is director of policy and public affairs at the Personal Finance Society
