While the Financial Conduct Authority (FCA) acknowledges that many financial firms already uphold commendable practices when it comes to safeguarding their clients, they insist that firms can always be doing more.
This does not constitute advice and advice should be sought in all instances before acting on it.
Effective 31 July 2023, this new Consumer Duty will ensure that clients can expect crystal-clear communications and tailored products and services that meet their specific needs. This duty also asserts that these products and services provide genuine value and that their clients will receive prompt and effective support whenever required.
By implementing this new consumer duty, the FCA aims to set a higher standard and expectation for the care and protection of clients across the financial services industry. These rules introduce a new Consumer Principle, which requires all firms “to act to deliver good client outcomes”.
What is the Consumer Principle?
The consumer Principle requires all financial firms to act in a manner that will allow them to consistently deliver positive results for their clients. This means that it will now be the financial institution’s duty to provide the necessary information and support so the client can make an informed decision.
No matter what kind of financial product you’re looking for help with, whether it’s a pension or any other kind of investment, these rules ensure that you will fully understand the value of the product and can rest assured that it’s the right one for you.
Under the new Consumer Duty, these rules are tied to four desired outcomes that underscore the key aspects of a client/adviser relationship that will ensure a favourable outcome.
Four desired outcomes:
(1) The quality and suitability of products and services
- Do the benefits you receive justify the price of a product or service?
(2) Fairness in pricing and overall value
- Do the products and services meet your needs?
- Will it help you achieve your financial objectives?
(3) Enhancing consumer comprehension
- Do you fully understand the product or service and what you are signing up for?
- Is the product information accessible for you to read and understand?
(4) Provision of effective consumer support
- Are you receiving the support you need when needed?
- Is the right support being offered for your circumstances?
Meet with us to learn more
With this new consumer duty, clients have the right to all the information they need in a way that is easy to understand and allows them to make the right financial decision. Financial advice firms must understand what clients want from a specific product and service and support them to achieve this goal. To learn more about how we’re dedicated to always giving our clients customised advice for their individual circumstances and goals, get in contact with us today.