REGULATORY EXPERTISE
Ongoing advice service delivery The FCA ’ s focus on financial advisers ’ ongoing services should come as no surprise . The message has been repeated often in the years since RDR – clients must receive a tangible service in return for an ongoing advice fee . In fact , the delivery of ongoing services was probably the single most important message that we gave to firms in our Consumer Duty support over the last 18 months . We know ongoing advice models dominate the market and generate the majority of advice firm revenue . The design and delivery of ongoing services therefore has a significant impact on the quality of consumer outcomes . Whilst only a small number of firms received the information request , all firms – regardless of size – must take note . For many firms , this should be seen as an opportunity to get on the front foot ahead of any further wider review that may arise . We suggest that firms should carry out a health check of their ongoing service proposition and ask themselves some ( potentially difficult ) questions :
• Have you reviewed your ongoing service proposition in view of CD ?
• Could you explain the changes you have made / or reasoning where there are none ?
• Do your customers understand the service , i . e . they know what is included , how this will be delivered , how frequently and how much they pay ?
• Have you carried out an assessment of need and an assessment of value ?
• Are you up to date with your reviews and do you have this MI available ?
• Do you monitor the quality of the ongoing advice delivered ?
• Do you have a disengagement policy ? When would you consider a refund ?
• What feedback have you collected on your ongoing service from clients ( and staff )? What should be evident is that the recent focus on ongoing services and retirement income advice is not isolated , but part of a bigger picture : Consumer Duty .
Consumer Duty annual assessment If we had to pick a regulatory phrase of the year so far , it would have to be ‘ not a once and done ’, and this applies to the requirement to monitor outcomes under CD . The key findings from this monitoring assessment should be presented to the firm ’ s senior management for sign-off by 31 July 2024 , and annually thereafter .
This process should allow firms to identify and remedy any gaps or issues . Many data points within this assessment will be obtained from existing monitoring activities undertaken by the firm . A number of key metrics have already been mentioned in this article : checks on advice suitability , accuracy of advice registers , ongoing service delivery , and client and staff feedback . Whilst there is no template available from the regulator , we suggest this assessment could focus in on six areas : culture and governance , the four Consumer Duty outcomes and vulnerable customers . This annual monitoring requirement applies to all authorised firms , industry-wide , regardless of size . From the very smallest to the very largest regulated firm . Some of you might have received / might receive CD-related requests for information from others in the distribution chain . By engaging in this feedback loop , you ’ ll be helping them to complete their assessments too . The only constant is change , as they say , and this is certainly true for regulation . To stay the right side of the regulator , we recommend the three areas above remain key areas of focus for firms in the coming months .
IF WE HAD TO PICK A REGULATORY PHRASE OF THE YEAR SO FAR , IT WOULD HAVE TO BE ‘ NOT A ONCE AND DONE ’, AND THIS APPLIES TO THE REQUIREMENT TO MONITOR OUTCOMES UNDER CD .
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