Advice firms need to evidence client stewardship, have clear guidelines on best practice and leverage new tech innovations if they want to have the “right” consumer duty mindset.
Dorian Hughes, business consultant at Redington, believed most adviser firms have good intentions and put their clients at the heart of what they do but work needs to be done in key areas such as client communication, retirement income and fee structures.
He also said that compliance with consumer duty was very much a “focal point” and outlined three practices firms can show in order to meet ongoing compliance requirements.
The first practice was that firms needed to evidence their client stewardship with Hughes highlighting that for most firms it was not their stewardship of clients which needed attention, but rather the provision of the evidence of that stewardship.
He said: “Firms with the right mindset are those that have taken steps to sharpen their pencils in this area. Centralising data and information, linking research to consumer outcomes and evidencing their processes with clear governance and oversight.”
Hughes also pointed out that firms needed to have clear guidelines on best practice because this will differ between each firm and by unique factors such as size, product offering and specific needs of the client bank.
“The most progressive firms are those looking to demonstrate compliance to the regulator based on their own best practice and metrics.
"This could involve bringing in outside expertise, for instance, having an independent consultant to review the FCA’s published rules for the duty set out in its most recent policy statements and assess compliance against the specific clauses which are relevant to their firm’s role,” he added.
Hughes believed some of the most successful firms were extensively using technology to streamline their investment offering and urged other firms to leverage new tech innovations.
He said: “Powerful web applications that centralise data, research, governance, oversight and consumer outcomes enable firms to quickly demonstrate that they are complying with the rules and delivering the best outcomes for their clients.
“The FCA’s own guidance states that ‘firms should…continue to make improvements in line with good practice’.
"As an evolution not a revolution, the consumer duty is not a once and done exercise, so we can expect to see more advisers further utilising tech solutions to embrace this opportunity for the benefit of their clients, the industry and broader society.”
alina.khan@ft.com
