Consumer Duty: The next steps

Good webinar yesterday hosted by David Geale, Nisha Arora, Matt Brewis, Kate Tuckley , Romana Pearson and others at the FCA.

Key themes included:

1.????? Fair value – The stark outlier was gap insurance where, in one example, for a ￡1 premium, 6p is the risk premium and 70p is the commission. Also, on the FCA radar were ongoing advice charges levied by Wealth Managers where they believe there are cases where “consumers are paying for (ongoing) services that they don’t need or don’t receive”. They said that firms need to understand in depth the relationship between price and benefits. This is “not about a justification of existing charges”

2.????? Vulnerability – Wealth managers were in the spotlight again “49% of portfolio managers and 62% of stockbrokers don’t consider it at all yet 50% of us will be vulnerable at some point”

3.????? What good looks like for Consumer Understanding – They said firms need to provide clarity on risks, cost, value and benefits (including data to back this up – find new data where necessary, don’t just repackage existing data)

The propositions provided by Life Moments deliver financial education for consumers and support their decision-making processes (through checklists, tools and calculators, all backed by a digital coach). Once deployed we gather data to demonstrate good Consumer Understanding & Consumer Support outcomes. For example

·??????? 77% of consumers feeling supported/fully supported in their decision making journey

·??????? 87% of consumers self-reporting a knowledge improvement following financial education

·?????? 62.5% of consumers reporting an improvement in financial confidence

?It strikes me that such propositions could provide support in a fair value assessment in terms of ongoing service charges where they are provided as part of ongoing services to customers (e.g. pre- or in-retirement customers).

?If you would like to know more, please get in touch.