The unwary adviser could be forgiven, looking at the regulator's new consumer duty, for thinking this is something only big firms need concern themselves with.
There is much talk of firms’ boards or equivalent bodies and non-executive directors being appointed as consumer duty champions.
How is this relevant to me, with my three employees and a photocopier, I hear you ask?
The answer is that if you’re a regulated firm providing products and services to retail clients, it applies to you.
Underneath the new principle of "acting to deliver good outcomes for retail clients" lies a big requirement for evidence.
The Financial Conduct Authority wants to be able to see just how you’re achieving that. And it reflects a shift in the way the regulator will supervise firms in future.
It’s also aligned with the senior managers and certification regime – so the more senior you are, and the closer you are to the decision-making in your firm, the more the FCA will expect of you in delivering, and providing evidence of, good outcomes.
There is an element of proportionality though; small firms won’t have the same compliance requirements as big providers.
But it also means the resource you devote to bringing in new customers should be broadly reflected in how you look after them once they’re in, and how easy it is for them to transfer out.
You may already be assessing, testing, understanding and providing evidence of the outcomes your customers are receiving, but how should you be doing this in future in a way that you can demonstrate to the regulator?
Not only do you have to show where good outcomes are happening, if you’ve discovered that some of your customers are having a sub-optimal experience, you must show you’re working out why, fixing it, and taking steps to stop it happening again.
There’s a certain amount of flexibility in the sorts of data sources firms will be expected to use. They will depend on factors such as the size of your firm, your client base and the products and services you offer (that ‘proportionality’ word again).
Happily, the FCA has published in its final guidance a suggested list of the types of information firms may want to collect (and, in many cases, will already be collecting). These can be grouped roughly as follows:
Your own customer data
If you have data from reviews of your client base it may show whether certain types of customers are more likely to buy certain products or services.
Do some tend to pay more or less, or get consistently better or worse outcomes? You can also use complaints data, including trends and root-cause analysis to show understanding of the cause of complaints.
