What does the FCA’s finalised guidance on consumer duty rules mean for advice firms?

by | Sep 22, 2022

Share this article

 Measuring success

The FCA says that it will measure the success of these proposals by monitoring key outcomes for consumers.

Therefore, the FCA wants to know whether consumers experience improvements in outcomes in the following areas:

  • Fair value: Consumers pay a price for products and services that represents fair value and poor value products and services are removed from markets leading to fewer upheld complaints about poor value and unexpected fees or charges.
  • Suitable products and services: Consumers are sold and receive products and services that have been designed to meet their needs, characteristics and objectives leading to a reduction in the number of upheld complaints about products and services not working as expected.
  • Suitable treatment: Consumers receive good customer service leading to a reduction in upheld complaints about switching, cancellation and service levels and customers having higher levels of satisfaction with the service they receive.
  • Confidence: Consumers increase their confidence in financial services markets and are equipped with the right information to make effective, timely and properly informed decisions about their products and services.

The cross-cutting rules are being stressed as the cornerstones and over-arching all the current regulations. These would seem to be such basic rules, that I find it bizarre that they need to be highlighted as being compulsory. For most firms, this will involve absolutely no change in working practises in the following areas:

  • Act in Good Faith – surely that is a basic ethic of business and behaviour? We have to question why would any financial firm not practise their business acting in good faith, however it must be there for a reason.
  • Avoid Causing Foreseeable Harm – again we have to wonder why would any adviser put a customer on a course of foreseeable harm, however, it will be formalised in this way.
  • Enable and Support Retail Customers to Pursue their Financial Objectives – this is pretty much the sole reason for providing advice. What else would any adviser be targeting? The burden of proof is key.

The main issue around the new Consumer Duty rules is how advisers will be able to provide evidence to the FCA that their whole business practice is able to comply with them. There are examples in the FCA’s Guidance Notes of good and poor practice.

I presume that the FCA will be looking to collect information using RegData in this respect.

Time for action

The first thing that I have advised my IFA firm clients to do to prepare for these new rules is to set up a process to identify their vulnerable clients. They should make sure that they evidence what steps they have taken to enable them to deal with the vulnerabilities to deliver the advice that has been requested. I have advised firms to set up a register of vulnerable clients and actions taken. I expect that this will be an extra piece of information that the FCA will want to include in future returns.


Most firms will already have a register of vulnerable clients. But my recent experience is that advisers have not actively looked for signs of vulnerability and this will be expected in future. Most recently, I undertook one-to-one KPI meetings with the advisers in a particular advice firm and none of them had met any vulnerable clients in the previous six months. Since May, they seem to be meeting them all the time!

For some years, I have been advising firms to have a robust complaints procedure and register. Complaints have, of course, been on the RegData returns. Clearly a complaint is a good warning that clients may not have received a good outcome. I am sure that the FCA will be treating this as a hot potato in the future.

Complaints that go to the Financial Ombudsman Service will also be a high priority. It is evidence that the firm’s internal procedures have not provided the client with a satisfactory outcome, let alone the targeted good outcome.


As far as I can see, the new Consumer Duty will be the gift that keeps giving as far as compliance and/or enforcement agencies are concerned. In accordance with the ancient Chinese curse, we certainly live in interesting times.




Tony Catt, Compliance Consultant, 07899 847338

Share this article

Related articles

Winners of the Protection Guru Awards 2022 are announced

Winners of the Protection Guru Awards 2022 are announced

Protection Guru, has today announced the winners of Protection Guru Awards 2022. In this, their second year, the awards have been established to recognise the leading lights of the protection industry. The team at IFA Magazine extends our congratulations to all this...

Trending articles

IFA Talk logo

IFA Talk is our flagship podcast, designed to fit perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast - listen to the latest episode