Consumer duty  

Client communication is the 'fundamental issue' of consumer duty

Client communication is the 'fundamental issue' of consumer duty
Mark Polson, founder at the Langcat

The main issue with conforming to the new consumer duty is communication with clients, according to Lang Cat founder Mark Polson.

Speaking at the Personal Finance Society’s Festival of Financial Planning this week (November 2), he discussed what the regulator’s new consumer duty framework would mean for firms

He said: “The fundamental issue is communications with clients and a lot of this isn't [advisers'] fault. 

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“It has to do with the absolute barrage that most providers chuck out here, which has got nothing to do with legal requirements, which has nothing to do with compliance requirements. 

“It has everything to do with 'ass covering' added over years and years and years.”

He said the challenge is for the providers that advisers work with to strip a lot of that stuff back.

“You simply cannot give somebody a 95 page [terms and conditions] document and think it is fine because the client can't possibly make an informed judgement based on that,” he said.

“People say, when you sign up for your Kindle there are 100 pages or something but the difference is if I have a disappointing experience with my Kindle, I may not enjoy reading my ebook. 

“If I don't get it right for my retirement, I'm entirely screwed in a really fundamental way so the jeopardy that goes alongside it is material, therefore the impacts are material and therefore the work needed is material.”

He emphasised that advisers have a lot to do about ensuring that the communications that customers are given aid them into being empowered to make better financial decisions.

“It's not enough that they've got you. You have to help them do more, you're still going to do exactly what it is that you do, and that means if you're holding the companies you work with to account then do that,” he said.

“You're in control of what your clients receive.”

He said that if advisers simply pass on to their clients material which they cannot possibly be expected to read and then to make decisions on the basis of that material, they will have "failed" in upholding the spirit of the consumer duty.

Polson said in order to ensure ongoing suitability, everyone needs to understand what is going on, and that can’t be done if clients are having to “wade through all this morass of nonsense”.

He emphasised that it was not enough for clients to have an adviser - they had to understand it themselves. 

“They absolutely do not need to understand Markovitz and modern portfolio theory, they don't need to be tax experts, they don't need to be you but we have to make sure that they understand what's going on,” he said.