The Personal Finance Society has published a Consumer Duty good practice guide to help Financial Planners prepare for the new rules.
The guide includes an introduction to the rules, how they will impact systems and culture and how they interact with product governance and case studies.
Financial advisers and providers should not underestimate the extent of what will be expected of them under the new Consumer Duty, the Financial Conduct Authority says.
The regulator said the Duty will be a ‘significant shift’ in what it expects of advice firms when the full rules coming into force next July.
The PFS has also warned that the new Duty will be much tougher than the previous Treating Customers Fairly regulatory principles.
Dr Matthew Connell, director of policy and public affairs at the PFS, said: “In many ways, financial advisers have been at the forefront of care for their clients – there is no greater discipline for a professional than sitting in front of a client for an annual review and explaining how their investments have performed.
“The Consumer Duty recognises the unique position advisers have in assessing value for clients, saying “the adviser can often also have the clearest oversight of the customer’s overall position and an overview of the total proposition”’
“Our good practice guide sets out the regulator’s expectations, and is designed to start a conversation about how advisers can discharge the Consumer Duty in a practical and achievable way.”
The FCA’s new duty is one of the biggest overhauls to UK financial regulation since the Retail Distribution Review. It will introduce a sweeping new set of rules which will require firms to do more to protect consumers from harm and bad financial decisions.
Firms will be required to do everything possible to avoid “consumer harm” at every step of the customer journey.
The new rules are focused on the provision of value to consumers and evidencing it.
Under the new rules, which will come into force in July, Financial Planning firms will be required to:
- Act in good faith towards retail customers
- Avoid foreseeable harm to retail customers
- Enable and support retail customers to pursue their financial objectives
Financial Planning firms will have to provide consumers with information they can understand, offer products and services that are fit for purpose and provide helpful customer service.
Firms will also have to evidence what they are doing to meet the Duty.