2 min read 25 Mar 22
Here we are, having made it to the fourth and final Consumer Duty outcome. If you’ve already read the previous articles on outcomes one, two and three, then you’ll already be familiar with why it’s worth taking a deep dive look at each of these. As the name of Outcome 4 ‘Consumer Support’ implies, this relates to how a firm supports its customers using its products and services. And, as with all the outcomes, it’s important to note that when the rules are implemented, the Consumer Duty will create a clear requirement for firms to provide this type of support to their customers.
The purpose of this support should enable consumers to realise the benefits of the products and services they buy, pursue their financial objectives, and ensure they can act in their own interests.
As we’re used to seeing now across the Consumer Duty outcomes, the regulator’s proposals around consumer support go further than existing rules.
It starts with a fairly simple, or overarching requirement, to carefully consider the support their customers need and ensure that a firm’s customer service delivers to their needs.
More specifically, the FCA highlights what not to do when it comes to supporting customer needs such as designing processes with unreasonable barriers that do not act in their interests or prevent consumers realising the benefits of the product or service. Examples include imposing unreasonable additional monetary and non-monetary costs on consumers.
As with the other Consumer Duty Outcomes, there is also an emphasis on monitoring progress, in this case the quality of the support being offered. Firms should keep an eye out for evidence that may indicate any area where it may be falling short and act promptly in response.
And last but certainly not least, firms must ensure they don’t disadvantage particular groups, especially those with vulnerability characteristics.
It’s important to say that all these requirements are very much minimums in the eyes of the regulator, with the expectation (or hope?) that firms will compete by going further. Good or outstanding levels of service will still be a differentiator, but poor service experiences should become less frequent.
Many of you reading this will no doubt be pleased to hear that if these rules prove to have the desired effect, it could well make life a lot easier for advisers and their clients. Pretty much every adviser will have many horror stories where the service from certain providers has fallen way below these standards.
We also know already that quality of service is an important selection criteria when advisers are completing their platform due diligence, and these new rules are only going to amplify the importance of selecting a provider that will meet the client’s needs, both at the point of sale and in the future.
This point about future needs is an important one. The FCA is expecting firms to apply the same consumer support standards at all stages of the customer journey. For example,
As mentioned, all firms will be required to regularly monitor whether they are providing an appropriate level of service, although the rules don’t necessarily mean that they have to guarantee there will never be any issues or delay. There is a clear reference to “reasonable expectations”, which will need to be assessed, documented and monitored.
All in all, this should be good news for advisers and their clients. The services delivered by advisers to their clients tends to be positively received, and for most advice firms I expect the only impact will be more work to monitor and evidence this point.
And, as my conversations with advisers remind me all too often, if these new rules can achieve their aim of improving service across the value chain as a whole it will be a welcome change.
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