Consumer Duty one month on – pointers from the FCA Retirement Income Advice Study

by | Aug 31, 2023

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Today marks the first month since the Consumer Duty went live. We can now expect every FCA consultation, study, or policy intervention to refer to, or clarify expectations under, the Consumer Duty.  

The FCA’s Retirement Income Advice survey, with 87 questions, has many crossovers with the Consumer Duty and provides a raft of insights into future FCA expectations, potentially beyond the retirement income space. 

Steven Cameron, Pensions Director at Aegon, comments: 

 
 

“The FCA is in the middle of reviewing the Retirement Income Advice market and its recent adviser survey, with 87 questions, provides many insights into what the FCA is looking for as the Consumer Duty beds in. This covers areas such as target markets, ongoing advice services, vulnerable customers, platform selection, foreseeable harms, remuneration and culture. 

The section on target markets asks about common client objectives, key characteristics, minimum fund values and groups for whom the firms’ decumulation advice models may not be suitable. This may provide insights into FCA expectations around defining both positive and negative target markets.

The FCA is exploring how much and how frequently clients are paying for an ongoing service, and what this service covers. The specific question on how many are paying for – but not receiving – ongoing advice, plays specifically to the price and value outcome. 

 
 

With the Consumer Duty’s laser focus on vulnerable customers, it’s not surprising the FCA asks about firms’ vulnerable customer policies, identification processes, the proportion deemed vulnerable and how services are tailored.  

The questions on platform usage and selection may be seeking to assess if these are aligned with delivering good outcomes for decumulation customers.   

Examining how many clients’ drawdown funds can no longer sustain previous income withdrawals may be a pointer to foreseeable harms considerations. 

 
 

Finally, the question on what criteria is included when assessing adviser bonuses may be seeking to check a firm’s culture is meeting Consumer Duty expectations. 

The FCA is expected to feedback on this review later in the year, and it will be particularly interesting to see how many times this refers to the Consumer Duty.” 

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