Consumer Duty

The Consumer Duty is a significant piece of new regulation that sets higher expectations for the standard of care firms across the financial services industry give to their consumers in retail financial markets. It aims to ensure that existing best practice around good outcomes for consumers is applied consistently across the industry. The Duty requires firms to have robust processes in place to help deliver four key outcomes covering products & services, price & value, consumer understanding and consumer support. These are key elements for a firm’s relationship with consumers to drive good outcomes on a consistent basis.

Value Assessment

This leads to fulfilling the price & value outcome and requires adviser firms to ensure clients get value for money, meaning the amount a client pays for a product or service must be reasonable when compared with the benefits on offer. The value assessment is for your part of the distribution chain, so advice fee or in house investment fees rather than other elements of the distribution chain such as platform or fund manager fees. However, these external costs must also be considered.

Product Assessment

This leads to fulfilling the product & services outcome that ensures firms act to deliver good client outcomes. The aim of the products and services outcome is that all products and services for retail customers should be fit for purpose. They need to be designed to meet consumers’ needs and targeted at those consumers. Firms must also ensure the intended distribution strategy for products or service (their advice) is appropriate for the target market. Finally, firms must check their internal processes and documentation and carry out regular reviews of their products and services to ensure they continue to meet the needs, characteristics and objectives of the target market.