How the FCA's new duty of care might affect advisers

How the FCA's new duty of care might affect advisers

Advisers have been warned against complacency when it comes to the Financial Conduct Authority's proposed new consumer duty of care.

The Financial Conduct Authority has published proposals for what it calls a "new consumer duty" which it says will set clearer and higher expectations for firms' standards of care towards consumers.

The regulator has said it is concerned about firms providing information which is misleading or difficult to understand, and products or services which don't represent value.

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It said it wants firms to ask themselves 'would I be happy if I were treated like this?' or 'would I recommend this service to my friends and family?'.

But guests on the latest edition of the FTAdviser Podcast said advisers should we wary of complacency.

Stefan Fura, co-founder of advice firm Furnley House, said: "The majority of people will [hear this] and go 'well, we already do this'. Well unfortunately with any industry we have to recognise there are examples, and well publicised examples, where customers haven't got the right outcome or the right advice.

"If we're going to address that, we all have to take responsibility for that - the regulator, the providers and the advisers."

Sally Plant, head of financial planning at the Chartered Institute for Securities & Investments, agreed, saying there were going to be "bad eggs" in any profession.

She added there were areas where the FCA's proposals seemed to contradict themselves - such as in the area of communicating with clients.

She said: "They have put in the paper that they wish all the options available to consumers to be communicated and understandable but then there is also [in the paper] that they don't want too much information that it hinders decision-making.

"So the FCA will need to offer a bit of guidance on where that line is."

Fura said this issue highlighted the lack of "joined up thinking" which was sometimes evident from regulators.

To listen to the full podcast click play on the player above. FTAdviser's podcasts are also available on Apple Podcasts, Spotify, Stitcher and Acast.