The aim of the duty, which comes into force July 31, is intended to set higher and clearer standards of consumer protection across financial services and requires firms to act to deliver good outcomes for customers.
The duty is about a shift to good consumer outcomes at all stages of the journey and for the lifecycle of the product.
Firms must be able to define, monitor, evidence and stand behind the outcomes their customers are experiencing.
Paul Neal, mortgage and equity release adviser at Missing Element Mortgage Services, says his company is well prepared for consumer duty, however he believes that many firms are not.
It’s fair to say that some firms are still working through the detail required for the July implementation date.Kelly Melville-Kelly, Equity Release Council
Neal says: “The FCA is putting increased focus on how we look after some of the most vulnerable clients in the market, no doubt increasing the workload and the need for care when dealing with these clients.
“Many companies will be very much under the spotlight if they do not get this right and are unprepared for when this is implemented later this year.”
Samantha Bickford, mortgage and equity release specialist at Clarity Wealth Management, agrees.
The key thing she is taking from the consumer duty is, from now on, the question ‘are we doing the right thing?’ will need to be asked from the first contact with a financial services product, all the way through to a sale if one is made.
Bickford adds: “This is vital protection for our vulnerable customers but one that any good reputable and ethical adviser would have already been considering from the first point of contact with the client.
Ensuring the clients’ best interests and ‘doing the right thing’ should be instilled in the adviser anyway not just because of impending consumer duty.
“Those who are not making the right choices for the client now have the consumer duty regulations to answer to and I would hope the new regulations will highlight the advisers who are not acting in the client's best interests.”
The Equity Release Council recently hosted a member webinar with the FCA, which it says was the best attended of its webinars. The council is also providing support for members, which include guidance on fair value assessments.
Kelly Melville-Kelly, head of risk, policy and compliance at the ERC, says: “It’s fair to say that some firms are still working through the detail and the necessary processes required for the July implementation date.