We agree with making the advice simpler so long as it meets customer needs. Customer protection will rely on the FCA’s Consumer Duty regulation. Will the Consumer Duty be up to the task?
The consultation can be found here with our response here.
We support the FCA in wanting to tailor advice to customers’ individual needs: simplifying without compromising on the quality of the advice given.
Achieving a win/win for the customer, through better access to the right financial products, and for the financial institution, through reducing the regulatory burden, is finely balanced and relaying heavily on the Consumer Duty, Applicable from the 31st July 2023, the Consumer Duty requires firms to “competently, diligently and impartially investigate any circumstances that lead to foreseeable harm” (more information can be found here).
Our main observations are:
- The Consumer Duty is used as the basis for the FCA’s arguments to the simplification.
- For the eventual requirements to work, the finance sector must always apply them in the best interests of the consumer.
- But the simplification could provide greater ‘wiggle room’ to tip any potential benefit away from the customer towards the provider.
- Assuming it does work as the FCA hopes, customers could benefit from more relevant advice, simpler communications and lower costs.
- To minimise the risk of misapplication or abuse, the FCA must monitor behaviours and have strong enforcement measures, including redress for customers..
- The FCA is aware that a ‘transition plan/process’ is needed specifically for legacy charging arrangements.
