The advice profession and regulators have a collective responsibility to support better consumer financial outcomes, according to Keith Richards, chief executive of the Consumer Duty Alliance.
Speaking at the CDA’s inaugural financial planning conference last week (October 11), Richards said a lack of joined-up consumer financial education and engagement has been compounded by poor perceptions of the profession in the past.
All this is causing harm to the end consumer, he said.
He therefore called for the government, regulators and advisers to work together to overcome this.
Richards said: “People are sleepwalking into a world of poverty in retirement, simply because they've not been accessing information perhaps they wanted.
“Government, regulators and sectors now under consumer duty are a collective.
“We have a collective responsibility to support better consumer financial outcomes more broadly, and we need to find ways to work together, almost in a tripartite way.
"For our profession, perhaps the Alliance is a good catalyst to elevate the great work that trade bodies have been doing, and that other organisations have been doing.”
Consumer duty
Richards also spoke about the consumer duty and why these regulations were important to improve the profession.
“Consumer duty. Why is it so important? Well, it's simple. The consumer duty sets clear expectations for the standard of care firms give to consumers in retail financial markets,” Richards explained.
“Now this is why it's so fundamental for us. The professional standard of good practitioners and firms based on outcomes rather than rules.”
He explained that advisers have typically worked based on outcomes and often the frustration was that prescriptive regulation got in the way of good outcomes.
“Sometimes we had to do things that complicated rather than simplified and that didn't help our clients understand better, but actually confused them,” Richards said.
“This is a watershed moment, because you can untangle those things to ensure your clients have a better understanding of what we're delivering, becoming more transparent by removing bureaucracy and introducing simplicity and being able to evidence the good outcomes this achieves.”
He said any changes of this scale take a while to implement, but he has seen the FCA “work vigorously, to keep trying to get the message across”.
“When we're so busy, we get tied up, and we don't always hear the message in the way that it's intended. So we've got to work together to get those principles of good practice. Who owns consumer duty? Well, we all do.”
He explained consumer duty was something the profession has always practised in some way.
“You might have called it a different thing - client centric, commitment to best client outcomes - but ultimately this is about our client obligations.
"That's exactly for me why the shift from prescriptive goals to outcomes-based regulation is such a watershed moment, and a key time for our profession if we embrace it in the way that it's intended,” Richards said.
