So we now have a better idea of what the Financial Conduct Authority consumer duty rules will mean, the overriding principle though is firms must "act to deliver good outcomes for retail customers".
Well I am glad somebody clarified that for me because for the past 30 years I did not know that is what I should be doing.
Actually doing that seems to boil down to four parts: governance of products and services; providing fair value products and services; ensuring customers understand those products, and; providing good support.
Quite how that is determined seems to be up to the providers and advice firms. Forgive me but I do not suddenly expect a raft of providers, fund managers and discretionary fund managers putting their hands up and saying, 'You know what, for all these years we have provided really poor products, overcharged for them, made them too complicated and then not supported the client once they had bought them'.
It will be interesting to see what, if anything, actually changes on that side. I rather expect reams to be written to justify what they already do as meeting the new rules.
As for us advisers and advice firms, as far as I can see the good financial planning firms offering good service and always putting clients interests first have little to fear.
By and large they will already comply with much of the new rules. Again, it looks like the biggest change is you may have to actually write down what you do, and how you do it, in some sort of policy and procedures manual, to prove that what you already do for clients, probably have done for years, meets the new regulations.
What also seems unclear is how all this will be enforced; how will firms be required to report against these new rules, and will anyone actually check? As the aim is better client outcomes, let us hope that it has better oversight than all the current regulations do.
It is still far too easy to scam people, provide poor value advice and not meet current regulations without getting caught. I am sure we can all name firms, providers and advice businesses where treating customers fairly passed by with barely a ripple.
The FCA has indicated it will monitor Financial Ombudsman Service complaints records. That is frankly not good enough; first because by then it is too late, the client has already suffered harm, but mainly because it may take years for clients to complain about a firm, and by then they could have disadvantaged hundreds of clients. Regulation to protect clients needs to be front foot, not back, it needs to prevent, not close down after the fact.
I hope for better client outcomes, I do not expect them.
Darren Cooke is a chartered financial planner at Red Circle Financial Planning
