The Financial Conduct Authority’s (FCA) Consumer Duty comes into force on 31st July 2023, providing revised guidelines for firms in the financial services sector.
Intended to set higher and clearer standards of consumer protection, the duty looks to address the continuing rise in “robo-advice”, the lingering after-effects of Covid – particularly on vulnerable customers – and the prevalence of misleading or complicated customer correspondence.
The duty will ensure that all financial services firms:
- Act in good faith
- Work to prevent consumer harm
- Deliver good client outcomes
Firms will also need to provide evidence that they are meeting these outcomes.
At Jane Smith Financial Planning, we always put you, our clients, first. And that’s why we’re taking our Consumer Duty obligations very seriously.
Keep reading to find out what the Consumer Duty changes mean for you and your long-term plans.
New rules for existing products and services come into effect from 31 July 2023
The FCA began its initial consultation on Consumer Duty back in 2021 and plans for its implementation have been ongoing ever since.
The upcoming deadline applies to “new and existing products or services that are open to sale or renewal” and applies from 31st July. Ultimately, the new rules aim to protect you, as a consumer, from the harmful practices of financial professionals.
You’ll be reassured to know that Jane Smith Financial Planning, and the rest of the profession, already abide by principles set out by the FCA, including a commitment to treating customers fairly – which you may have heard us speak about previously. But the FCA believes that problems persist.
These issues include companies:
- Providing misleading information or documents that are difficult to understand
- Offering products and services that are not fit for purpose and that do not represent fair value
- Providing poor customer service, leaving their customers without the information they need to act, or which could be seen to exploit consumer inertia, behavioural biases, or vulnerabilities.
Consumer Duty is designed to exist alongside the principles we already adhere to but places more emphasis on us to prove and document that we are doing our best by you.
We are acting to maintain high and clear standards and deliver positive outcomes for you
The FCA confirmed last year that firms needed to make sure that consumers receive “communication they understand, products and services that meet their needs and offer fair value and that they receive the customer support they need when they need it”.
The best products for you, from wherever we need to go to find them
As a trusted and family-run independent financial adviser, we already place your outcomes at the heart of everything we do.
Our independent status means that we can offer products from across the whole of the market, helping us to find the ones that best suit your needs and long-term objectives.
We know that our clients’ circumstances are different. That’s why we get to know all of our clients – their financial positions as well as their dreams and aspirations – so well. It means that we can offer bespoke solutions that consider your individual needs and objectives.
To further help us individualise our responses, we have taken Consumer Duty as a starting point for revisiting the way we think about and identify vulnerabilities within our client base.
Clear and concise correspondence, without the jargon
We also strive to ensure that the information we provide – from initial discussions to ongoing regular reviews – is clear and concise, easy to understand, and never misleading.
A recent Aviva survey found that 7 in 10 UK adults are puzzled by financial jargon, which is exactly why we work so hard to avoid it where we can.
It is important you feel confident, in control, and understood, and the two-way communication at the heart of our client relationships plays a key role in that. It’s one of the reasons we have written this article, and the others like it, you can find it on our Newsroom page or emailed via our monthly update.
Transparent about fees while always looking to improve the value they represent
The team we have built here at Jane Smith Financial Planning are diligent and committed to helping you achieve the best outcomes.
We are upfront, transparent and clear about the fees we charge.
But we know that there is always room for improvement, and Consumer Duty has given us a great opportunity to revisit our practices.
As well as re-examining our fee model, we have completed a value assessment to make sure we still offer great value for money, and we are looking at how best to break down and showcase that value.
It is vital to us that you know and understand how much you are paying, when, and why.
Get in touch
We are very proud of the team and the ethos we maintain here at Jane Smith. We also take our Consumer Duty obligations very seriously. That’s why we are re-examining our pricing and fee structure, revisiting our correspondence and implementing new practices around potentially vulnerable clients.
In the meantime, if you would like to discuss any aspect of your long-term financial plans, we can help. Please contact us on firstname.lastname@example.org or call 01234 713131.
This blog is for general information only and does not constitute advice. It should not be seen as a substitute for financial advice as everyone’s situation is different.