Consumer Duty

Introduction

The new Consumer Duty rules represent one of the largest regulatory changes that the financial industry has had to tackle since RDR. The challenge to all firms is the articulation and evidencing of how they are delivering ‘good consumer outcomes’. Businesses and clients should all benefit from the new regime, and it is important that the industry works together to ensure optimal delivery of the new Duty.

Overview

We welcome the new Consumer Duty introduced by the FCA and its aim of improving the standard of services  that customers receive across the financial services industry. The new duty focuses on ‘good consumer outcomes’ with all regulated firms expected to have completed their gap analysis and plans by Summer 2023. This concept has replaced ‘treating clients fairly’, a standard introduced over 15 years ago. The change has been described as ‘revolution, not evolution’ and it is incumbent upon everyone in our industry to proactively make the changes needed. Our CEO, Nick Coghill, comments “We pride ourselves on achieving the highest levels of service for advisers and clients and we are seizing this opportunity to further enhance our adviser and client support to ensure good outcomes are delivered.”

Determining whether consumers have received good outcomes will be measured on the basis of the individual customer experience. The new Duty invites us to look at the journey that (advisers and particularly) clients take with CAM, and it emphasises the importance of achieving high standards of service and communication during the ongoing management of client portfolios, not just at the stage when clients first join us. We are a people-focused business and have enjoyed rising to the challenges that this has presented.

Implementation of the Duty

We first established a Working Group to examine the draft regulation in 2021 and a team representing all areas of the business has been meeting regularly ever since. This embodies our approach; the Board and Senior Management have been key drivers, but all staff have given input and are being trained to know what is expected of them. Implementing this is far from being an exercise that is owned solely by Compliance but, of course, ensuring that we have achieved full compliance with the regulation is a primary goal.  Initiatives have included the creation of a new client feedback log and the appointment of a Client Experience Manager, both intended to capture the views of advisers and direct clients. We’ve also been revising our agreements, website, and marketing materials to support the Consumer Duty areas of client understanding and communication. If you’d like to discuss any aspect of the regulation with us, please contact BDM@city-asset.co.uk or Tracy.Coghill@city-asset.co.uk (Tracy is our new Client Experience Manager).  We’ve set out below some FAQs that may be of interest.

Have you met the deadlines for the implementation of the new regulations?

Yes. We’ve been working on this project for nearly 3 years and had a good outline gap analysis and plan ready for the first deadline in October 2022. Since that point, we’ve committed significant resource to implementing the action points and identifying further areas where we can enhance our offering. We are confident that our regulatory obligations have been met. However, even after the deadlines in April and July 2023 and July 2024, we will continue to work to ensure that the good ideas that we are generating are delivered to advisers and clients. We see the duty as providing additional motivation to continue to focus on all aspects of our client and adviser service over coming years, not just to meet regulatory rules.

Do you have Target Market documentation in place?

Yes, here’s a link to the document that we have developed.

What resources have you used to deliver Consumer Duty?

The Board and our Executive Committee have led the process, but staff at all levels of seniority have been involved throughout, working together in our Consumer Duty Committee. We are also working closely with PIMFA on their Consumer Duty group and a member of our team is speaking for a second time as part of a panel on Consumer Duty at the annual PIMFA Compliance Conference. The link to Tracy Coghill talking about what is reasonable in terms of good outcomes appears here. We are speaking to lawyers and consultants, but this is a project that is driven by the business, itself.

Have you looked at Price and Value?

We have carried out a considerable amount of qualitative and quantitative work in this area, drilling down into every aspect of cost, price, deliverables and value added. We have been working to ensure that advisers are equipped with all the requisite information for their clients to ensure all parties are aware of not only the cost of our service but also the value added areas as well.

Do you have a Value for Money Assessment for your portfolios?

Yes, we do and it can be found here. It is important that this is clear and easily accessible for our advisers and clients.

How are you tackling the distribution chain?
There is an industry wide approach by fund managers, building on the PROD rules. We have begun an ongoing dialogue with Platforms regarding our respective duties to advisers and clients. We will be continuing to proactively reach out to advisers to understand how we can work together to ensure we are able to deliver good consumer outcomes along the chain.

How does Consumer Duty impact Vulnerable clients?

Our Vulnerable Clients Committee is working hard to ensure that we provide a robust service to clients who may find it more challenging to achieve good outcomes. We have been working closely with staff, changing policy and procedure, developing new guidance and oversight, and looking at IT solutions to make information more accessible. This is certainly an area that we will continue to work on long after the final deadline in July 2024 as we all agree that we are continually learning and trying to develop support techniques. Again, we are working closely with the PIMFA Working Group on Vulnerability.

What have you found most challenging?

We have developed a resilient suite of MI resources and are determined to leverage IT to ensure that this is produced accurately and without a serious resource impact. Deciding what to measure and how represents a challenge for everyone in the industry, including ourselves. We expect that the annual review and assessment of evidencing ‘good consumer outcomes’ will evolve over time as the processes are embedded into businesses.

Is there anything else that has been very important to your work on Consumer Duty?

Culture and training have been very important within our approach to Consumer Duty. There have been several firmwide training sessions on Consumer Duty in more general, regulatory terms over the previous months. We are also continuing our programme of training on vulnerability and client service, including using LPAs and complaints. Staff have been receiving training  for their specific team responsibilities and general skills training; for example on clear writing and communication, and additional information on particular aspects of the services that we provide, such as seminars on alternative investments. The adviser and client feedback, including our Adviser Survey (August 2023) has also been very helpful in identifying areas where our approach is working and those areas where we need to make changes.

Conclusion

The roll out of the new Consumer Duty is not something that we should be afraid of. For firms who provide a good service, the focus is on further documenting and evidencing everything that we do in practice. We are continuing to work with all our advisers and clients to ensure that this is not a ‘tick box’ exercise and our work to date has led to some excellent initiatives which we will build upon. Working in a collegiate, knowledge sharing environment will ensure that we and all our introducers and their clients will achieve the desired results.