Expert: Chris Shaw, Dundas Consulting Ltd Facilitator: Roderic Rennison: Catalyst Partners Ltd
Headlines:
- There is a lack of clarity in the new regulations
- The timetable for implementation is short
- The language and draft seem “woolly” currently in certain respects
- Evidencing clients’ understanding will be key
- Feedback will need to be recorded and be shown to be acted on
Discussion points:
There was some frustration expressed by those present around the Regulator’s motive in introducing Consumer Duty without providing clear definitions. For example, what is considered “reasonable”?
It was accepted that these are principles which individual firms will need to tailor to their own businesses.
There was acceptance that there would be a greater responsibility on the part of intermediaries to be able to evidence client understanding.
It follows that questionnaires, and other interactions with clients, will need to be carefully constructed and monitored. Simple, “tick-box” questionnaires with “yes/no” answers, will not be enough.
A point was made by one attendee that what matters most is that the client understands the degree of risk that they are taking; they do not need to necessarily understand every detailed aspect of the underlying investments.
The benefit of recording client meetings was debated with there being a consensus that technology now makes this much easier. It was also felt that this will help ensure that firms and their advisers are better trained, as recordings will enable those monitoring the quality of advice to be better able to do so.
Key takeaways:
- It is a challenge that firms cannot really begin to implement Consumer Duty until the Rules are finally published and that this will leave less than a year to ensure compliance
- There was concern that many Firms work to a 12-month cycle in reviewing client files and it would interrupt BAU to try to review all files in less than 12 months
- Greater clarity is required relating to date of implementation and a significant clarification and tightening of the language is needed. Firms should therefore make their views known to the FCA
- Firms need to stay abreast of developments and be prepared to act quickly to implement any changes, and then to have an effective means of monitoring them
