Copy article

FCA Consumer Duty Next Steps Webinar - reaction

ended 06. December 2023

This morning, the FCA ran a webinar entitled, Consumer Duty Next Steps (key points below). Newspage sought the views of financial services experts, bottom.

  • 70% of FCA-regulated firms feel confident with their Consumer Duty implementation
  • Firms generally have got a good handle on the fees set piece that the FCA was looking for
  • Mortgage advice firms offering "free services" are under review as to if they actually deliver "fair value" to consumers against fee-paying mortgage advice firms
  • Investment firms need to keep up the emphasis on Consumer Duty. Some regulated firms are being focused on by FCA as they are falling well short
  • Crypto firms seem to be struggling to adjust to their Consumer Duty responsibilities
  • Firms need to focus VERY heavily on their demonstration of Vulnerability Analysis of clients. Some regulated firms have centralised their systems to analyse vulnerability and ensure they have specialised and trained individuals to handle these consumers
  • FCA confirming that Consumer Duty isn't a once and done process - demonstration of ongoing tweaking is expected
  • Banking sector has important questions to ask itself on demonstrating "fair value" for consumers
  • Debt advice firms need to create sound factfinding processes to proper demonstrate effectiveness
  • Gap Insurance contracts are under close review that they focus on commission first and "fair value" second, based on the FCA's research. Insurance "fair value" is under close inspection from FCA
  • FCA expects firms to have facilities, under vulnerability, for people whose first language isn't English. FCA says up to July implementation, they have witnessed firms having difficulty in demonstrating vulnerability and giving this too low a priority
  • FCA have witnessed some investment firms now monitoring better for gambling transactions and taking action on this
  • Investment firms have shown a weakness in sharing relevant data with each other to assist "fair value" analysis
  • Closed Products come under Consumer Duty from August 2024, those firms, despite the additional time to implement, "appear" to be falling short. FCA has asked these firms to come clean with the regulator and ask for assistance. FCA has confirmed that this group of regulated firms appear to be in hiding at the moment and it could be concerning as this deadline approaches. FCA has repeated the statement that Closed Product firms speak to them, "their door is open" but no-one is beating down their door at the moment for guidance/assistance
  • Firms need to communicate with clients and evidence why a product doesn't meet the client's needs and indeed why it does

5 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
As my company is a transparent, fee-charging company, it is encouraging to see the FCA reviewing companies that offer "free services" to see if they offer fair value for consumers compared to fee-charging firms, and I eagerly await the results of this review. It certainly looks like the FCA has some traction on this. I can only endorse what they are trying to do, as it will lead to better consumer outcomes. A lot of emphasis also seems to be on investment firms, and the FCA findings to date that they are falling short of their expectations. That 70% of FCA-regulated firms feel confident with their Consumer Duty implementation is self-reported information and may not reflect the reality of the situation, so these percentages could be skewed.
Star Quote
Copy

Gary Bush
Financial Adviser at MortgageShop.com
The FCA confirming how the financial advice community has fared so far, identifying areas of concern and areas where they are seeing good practice, is good feedback for this quite onerous new regulatory structure. To hear recognition from the UK financial regulator that free doesn't always confirm the best cost is refreshing. It does appear that the investment, crypto, and closed book areas of the industry do need more emphasis and implementation of joined-up thinking. On the whole most financial advice firms have taken Consumer Duty as an opportunity to revisit their consumer offerings for the better of all.
Star Quote
Copy

Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
It's great that the FCA realises that consumers need to be looked after. The majority of advisers will be doing this already. What is being done about the minority who flout the rules?
Copy

Editor
Justin Moy
Managing Director at EHF Mortgages
Those borrowers with closed mortgage lenders, typically badged as mortgage prisioners, will hopefully see some hard and fast action from the FCA to rectify their unfair situation. The focus on people seen as vulnerable, who are stuck on historically expensive products, will hopefully see a final solution to their problem. Those lenders need to take the amnesty on offer from the FCA.
Copy

Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
It is commendable that the FCA is scrutinising firms offering 'free services'. As a fee-charging firm, we can accommodate a restricted number of clients every month. This allows us to provide a service that aligns with the FCA's Consumer Duty fair value and enables us to deliver an outstanding experience that is devoid of stress, hassle, and anxiety. We have done this even before Consumer Duty, and charging a fee enables our firm to do this.