The Consumer Duty's Final Rules have been published
Karl Dines, Head of Business Consultancy at SimplyBiz, comments on the FCA’s new Consumer Duty rules:
Just like Christmas, it’s felt like the Consumer Duty would never actually arrive – but it’s here, and the FCA has even outperformed Santa by making its delivery a few days early! But, is the Consumer Duty a shiny new BMX, or a lump of coal? To be honest – it’s pretty much what we expected, and what the FCA told us we were getting, so close are the final rules to those we saw in May’s feedback to the Consultation Paper. It’s a biggie; the rules will affect discretionary wealth managers, investment advisers, mortgage brokers, insurance brokers, and consumer credit firms, so will require both attention and action from all.
Whilst fully digesting the 160 pages of the Policy Statement will take a few weeks, we can see that the main ethos of the regulation, which affects all advisers, – ‘to treat clients as you would like to be treated’ – remains at its core. The fair treatment of clients with vulnerable characteristics, safeguarding of consumer rights, and delivery of the most suitable solution for a client’s needs and circumstances are already observed by the vast majority of advisers – the additional work lies in the creation of processes to meet, and document that you are meeting, the requirements of the new ‘Consumer Principle’, and its keen focus on demonstrable client support, understanding, and value.
Whilst the regulator has made it clear throughout the consultation and policy process that common-sense ‘reasonableness’ should be employed when firms design their Consumer Duty proposition, the final rules show that additional work will be needed from all advisers to ensure that they are all set to fulfil the new requirements. The regulator has extended the implementation period of the new rules to a year meaning that, for the majority of firms, fulfilling the requirements of the Consumer Duty will be achievable, but some hard graft will be required.