REGULATORY EXPERTISE
1 . Are you satisfied your products and services are well designed to meet the needs of consumers in the target market , and perform as expected ? What testing has been conducted ? As a financial planning firm , it ’ s important you have established a clearly defined target market for each service provided , including consideration of any groups of clients your firm targets with a particular service , or any negative target market , with ongoing monitoring in respect of value and outcome . This means consideration of the four Consumer Duty outcomes so that the right products are selected for the right target market groups . An example of this would be matching the correct product choices with your client demographic , for example , differentiation between suitable clients for an Insured Personal Pension as opposed to a SIPP . The products sitting within an offering must offer value when put into place for a client with the client clearly understanding the reason for the recommendation , with the firm monitoring outcomes through traditional methods such as file review and key performance indicators , as well as client feedback .
2 . Do your products or services have features that could risk harm for groups of customers with characteristics of vulnerability ? If so , what changes to the design of your products and services are you making ? Firms adapting and improving their processes is vital , for example by maximising the potential for good outcomes through technology . The client and adviser should be encouraged to take detailed notes around client discussions , in particular on any risks or disadvantages around recommendations and as this helps evidence client understanding in relation to risk . The client ’ s voice should be heard on file , with notes included to record answers , key client statements and soft facts . Fact-finding should take place at an appropriate time of day with communication through an appropriate channel and style , e . g . one long meeting or 2-3 shorter meetings . It should be checked the consumer understands the risks and disadvantages of the products before proceeding whilst all information is presented using an appropriate and effective communication channel , whilst utilising electronic tools such as immersive reader and read aloud is a perfect example of extra support .
THE FAIR VALUE OUTCOME WILL BE REVISITED AS PART OF A FIRM ’ S ANNUAL ASSESSMENT , WHILST ACTION SHOULD BE TAKEN IN CIRCUMSTANCES WHERE THIS ISN ’ T MET , FOR EXAMPLE THROUGH THE NON-DELIVERY OF ONGOING SERVICES
3 . What action have you taken as a result of your fair value assessments , and how are you ensuring this action is effective in improving consumer outcomes ? Evidence of fair value should be collected and recorded through a firm ’ s ongoing fair value assessments . This will include ongoing client interactions , industry studies and due diligence undertaken on an initial and continuing on the firm ’ s proposition including tools , products and platforms used by the firm on an initial and continuing basis with results reviewed and recorded . The fair value outcome will be revisited as part of a firm ’ s annual assessment , whilst action should be taken in circumstances where this isn ’ t met , for example through the non-delivery of ongoing services .
4 . What data , management information ( MI ) and other intelligence are you using to monitor the fair value of your products and services on an ongoing basis ? The expected level of MI is linked to the firm ’ s size and capacity , as well as customer base , the complexity of the service offered and above all the risk that customers may pay for services and not realise value . Regardless of the size of firm the FCA would still expect the firm to be able to provide evidence with respect to each part of the Consumer Duty . Customer complaints with root cause analyses , client surveys , data about customer usage and behaviour , such as transactional data like persistency and cancellation and operational data such as the availability of your adviser can evidence firms are meeting expectations . As a financial planning firm , it is expected the main complexity of providing fair value will be from an ongoing servicing perspective so it ’ s important the service documented in a firm ’ s disclosure document is consistent with the service a client is provided .
5 . How are you testing the effectiveness of your communications ? How are you acting on these results ? The firm should be proactive at identifying where a customer might need additional support and is willing to adapt its communication channel according to client needs , whilst communications are issued in good time and using appropriate channels for different groups of clients . This should coincide with keeping good quality records about client preferred communication channels and methods . The firm should consider different communication channels where necessary , with systems and controls in place to monitor engagement levels of clients in relation to communications sent and seek to test the effectiveness of communication both with regulatory experts but also with those with knowledge and experience that aligns with the target audience .
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