Awards & Charters

Introducing Consumer Duty

Introducing Consumer Duty The Financial Conduct Authority (FCA) is the UK’s regulatory body for financial advisers and financial services firms. It sets the rules to ensure that all firms put their clients’ best interests at the heart of their business, offering products and services that are fit for purpose and represent fair value. 

In 2022, the FCA introduced a new Consumer Duty which all regulated firms must comply with from 31 July 2023. Members of the Consumer Duty Alliance embrace FCA rules together with an independent professional code.
The new Consumer Duty is a package of measures with three main elements:

1. The Overarching Consumer Principle

This Principle states that ‘A firm must act to deliver good outcomes for consumers’ – a straightforward and perfectly reasonable expectation for any customer or client. All regulated firms and advisers who are members of the Consumer Duty Alliance have adopted this principle.

The FCA’s Consumer Duty guidance also breaks this principle into three cross-cutting rules and four key
outcomes that all firms must follow and be able to demonstrate that they are consistently meeting this principle for all their customers and clients.

2. Three Cross-Cutting Rules That Firms Must Adhere To

These rules outline the FCA’s
overarching expectations of firms to:

• Act in good faith towards consumers
• Avoid causing foreseeable harm to consumers
• Enable and support consumers to pursue their financial objectives

3. Four Consumer Outcomes You Should Expect

These outcomes build on the Consumer Principle and the Cross-cutting Rules and represent the FCA’s expectations of a firm in its relationships with consumers:
Products And Services

All products and services must be fit for purpose. This means designing solutions to meet your specific needs and only presenting them to the consumers whose needs they are designed to meet.

Price And Value

Products and services should represent fair value, not just because they meet your needs and objectives but also in relation to their price.

Consumer Understanding

A regulated firm should give you the information that you need, at the right time and presented in a way you can understand.

Consumer Support

You should expect to receive a customer service that meets your needs for as long as you’re dealing with a firm.

The FCA is clear that the new Consumer Duty represents a ‘significant shift in culture and behaviour’ and a ‘higher standard of care and expectation’. The Consumer Duty Alliance views it as an opportunity to raise the standing of the financial planning and advice profession so that all consumers feel confident that they’re in safe hands with the firm or individual they’ve chosen. 

In summary, Consumer Duty describes the standards you should expect when buying services from a regulated firm of financial planners or advisers. All members of the Consumer Duty Alliance have made a commitment to an independent Code of Professional standards as a way of demonstrating their commitment to deliver on their obligations and responsibilities to you.

The Consumer Duty Alliance views the new rules as an opportunity to raise the standing of the financial planning and advice profession

Introducing The Consumer Duty Alliance

The Consumer Duty Alliance is a not for-profit, independent membership body. Its purpose is to inspire greater confidence and trust in financial advice and financial planning by supporting the delivery of consistently good outcomes so firms are seen alongside other professional services as a ‘safe pair of hands’.

Benefit Of Using An Alliance Member

Alliance Members are committed to an independent Code of Professional Standards stating how they will always seek to deliver good outcomes from the advice they give, in addition to any specific commitments they make as a firm.

How To Identify An Alliance Member

Firms and individuals promote their Alliance membership by displaying a unique digital badge:

In addition, Affiliate Membership is available to organisations who align with the Consumer Duty Alliance’s purpose and objectives and offer their expertise and resources to support the wider work of Alliance.

Look Out For These Badges

Associate Member

Regulated financial advice and planning firms who have committed to follow the Consumer Duty Alliance’s Code

Individual Member

Regulated individual financial advisers or planners who have committed to follow the Consumer Duty Alliance’s Code

Want To Know More?

Visit www.consumerduty.org for more information about the Consumer Duty Alliance.

The Consumer Duty Alliance Code Of Professional Standards

These seven underlying principles of professional advice are designed to help consumers understand the standards and behaviours they should expect from an Alliance Member. Members of the Consumer Duty Alliance shall:

1. Act in good faith in all dealings with clients.

2. Always avoid causing foreseeable harm to clients.

3. Inform, empower and support clients to pursue their financial needs, objectives and aspirations.

4. Fully disclose, clearly explain and consciously mitigate any conflicts of interest identified in our dealings with clients, including where commercial interests might conflict with a client’s best interests.

5. Only offer products or services that are both suitable and needed, offering fair value and transparent pricing.

6. Ensure clients receive the support they need, when they need it.

7. Embrace a focus on customer vulnerability including adherence to the Consumer Charter of the Financial Vulnerability Taskforce.

You should always feel empowered to make informed decisions, and never feel reluctant to ask questions or request more time if you’re unsure. Before proceeding, always take time to consider recommendations or seek an alternative opinion, even if from family and friends. Professional advisers will always want you to be confident in the advice given and recommendations made.

Your Guide To The Financial Vulnerability Taskforce And Its CHARTER

What Is The Financial Vulnerability Taskforce?

The Financial Vulnerability Taskforce is a newly created independent and inclusive representative body covering the personal finance sector. Its ultimate purpose is to promote greater understanding of vulnerability, encourage appropriate behaviours and establish good practice amongst personal finance professionals in respect of people who find themselves in vulnerable circumstances.

What Is Its CHARTER?

At the heart of this initiative is a CHARTER which underpins the work of the Taskforce and sets out how professionals who commit to it are expected to work with customers in vulnerable circumstances. You can be confident when dealing with a financial planning firm or adviser which has made this commitment that they will use their best endeavours to provide you with a service that recognises your unique circumstances and delivers the same outcomes that you would expect if you were not in vulnerable circumstances.

A Safe Pair Of Hands When You Need Them Most

Vulnerability is something that can affect us all; through unexpected events such as illness, loss of employment, divorce or even the sudden acquisition of wealth through inheritance or a lottery win. While some health issues can lead to permanent vulnerability, fortunately in most cases it is a temporary phenomenon. But when it happens, you need to be assured that the professionals who support you fully understand its consequences and how best to continue to provide the highest quality service in these changed circumstances. When financial planning and advice firms and individual advisers commit to the Charter, they agree to abide at all times to the nine commitments.

What To Expect From Firms And Advisers Who Commit To The CHARTER

Advisers, financial planners and firms who adopt the Charter agree to abide by nine commitments, which are outlined below. Find out more about the Financial Vulnerability Taskforce and view its Charter at www.fvtaskforce.com

1. Making Advice Easier To Understand

Recognising that many consumers will find it difficult to understand many of the technical and specialist concepts and terms used in financial planning, firms and advisers will go out of their way to explain things in an accessible way. They will only proceed once they are satisfied that their client fully understands the implications of the advice being given.

2. Placing Your Interests Above All Else

As a client, at all times your needs will take priority over the financial interests of the firm or adviser and they will always use their best endeavours to provide an appropriate, personalised service for all their clients.

3. Understanding How Your Circumstances Might Make You Vulnerable

Firms and advisers will understand that vulnerability can be physical, mental, emotional or simply the result of a lack of understanding. Being dynamic in nature, it may be short-lived or longer term, sometimes permanent, transient, recurring or fluctuating over time and may be hidden. Firms and advisers committed to the Charter will act appropriately and with sensitivity in each case.

4. Not Making Assumptions About You

All clients will be treated fairly, regardless of their identity, age, gender, race, sexual orientation, disability, gender reassignment, religion or belief and they will guard against making assumptions about you.

5. Not Labelling You

Using appropriate language is important. For example, adopters of the Charter recognise that vulnerability relates to circumstances and not to a category of person and will not seek to label you as a vulnerable person but someone who is currently in vulnerable circumstances.

6. Dealing With You Sensitively

They will understand that people in vulnerable circumstances are often unaware of their vulnerability and, where they are aware, might not acknowledge it nor wish to be described as vulnerable. Firms and advisers will therefore acknowledge a heightened professional obligation towards those in vulnerable circumstances and the need for raised awareness, greater sensitivity, and additional technical competencies.

7. Adapting Processes And Maintaining Your Confidentiality

If you are considered to be in vulnerable circumstances, you will be encouraged to recognise your vulnerability, safe in the knowledge that business processes and professional services will be adapted so that you do not suffer detriment at any point. You can also expect outcomes to be achieved that are at least as good as for those who are not in vulnerable circumstances. They will also maintain confidentiality and ensure behaviours are fully compliant with all relevant legislation.

8. Ensuring Staff Are Knowledgeable And Appropriately Trained

Firms and advisers who commit to the Charter will make sure all members of their organisations deal compassionately, empathetically and effectively with those in vulnerable circumstances by raising awareness of vulnerability and by providing appropriate training in supporting those in vulnerable circumstances.

9. Taking Appropriate Action If You Are In Harm’s Way

In those rare situations where it is recognised that a client in vulnerable circumstances may be in immediate danger of significant abuse or harm, or may need immediate support, action will be taken to mitigate the risks they face including contacting the appropriate authorities if necessary. Examples of abuse or harm include inappropriate pressure from a third party and scams.

Find out more about the Financial Vulnerability Taskforce at www.fvtaskforce.com

The Financial Conduct Authority defines someone in vulnerable circumstances as being especially susceptible to (financial) harm, particularly when a firm is not acting with appropriate levels of care.

The Financial Conduct Authority has identified four drivers of vulnerable circumstances – physical and mental health, life events, financial resilience and financial capability – to which we would add a fifth – abuse and coercion.