As we reflect on the first anniversary of consumer duty implementation Richard Parkin, Head of Retirement at BNY Investments has had his say.
As we reflect on the first anniversary of the implementation of Consumer Duty, there have been some examples of where the Duty has had a direct impact on products and services offered. These include pressure on deposit takers to improve rates for savers, pressure on platforms to pay better rates of interest on cash, review of fee structures especially exit penalties and the focus on ongoing advice.
While these have all been notable changes, I believe the effect of the Duty is more subtle. It provides a clear framework against which products and services can be tested and so not only provides a basis for challenging existing practices such as those listed but, more importantly, should mean that new products and services are much better aligned to consumer needs and interests. In the long run this should have a profound effect on the industry through improving its reputation and increasing trust and confidence. This not only means better outcomes for clients but a more durable financial services market.
Looking forward, we need to see how much the FCA focus is on the substance of the Duty rather than its style. It’s really important that the Duty isn’t a tick box exercise and that we focus on the outcomes that firms are achieving rather than becoming too prescriptive about process. The FCA’s announcement regarding the rationalisation its rulebook to better align with the Duty is very welcome and will hopefully give firms more flexibility to meet their responsibilities in the way that works best for them and their clients.
I think it’s becoming apparent quite how far reaching the Duty is and how central it’s going to be to the way the FCA regulates going forward. Those who saw it as an unnecessary distraction may not be feeling any more positive about it now, but will no doubt recognise that they need to take it very seriously. It feels like we have a way to go before it feels like business as usual but many firms I’ve spoken to feel like their getting to grips with what it means for them and starting to see how it can benefit their business.
One year on from Consumer Duty it’s clear that this isn’t just another bunch of FCA rules but a fundamental shift in how the sector is regulated. After what was quite a painful implementation for many, firms are starting to recognise the benefits of having a clearer understanding of where and how they add value.
