The speech focuses on customer vulnerability in the whole wealth management sector.
Among other things Mr Reynolds notes that the Consumer Duty applies proportionately with firms more remote from retail clients having more limited obligations. However, he adds that the design and value proposition for a product or service, and the information provided to ensure it is understood, can have a real impact on clients with characteristics of vulnerability. “If you are part of the distribution chain, you need to act” warns Mr Reynolds.
In the latter part of his speech Mr Reynolds notes that one of the criticism of regulators is that they are “long on diagnosis and short on prescription” and he goes on to explain what things the regulator is looking for firms to do. This includes:
- Putting processes in place to recognise those who may need more help, or to identify those engaging with the firm’s services where they may not meet their needs. This applies to all firms – with or without direct client engagement.
- Considering why people are using the firm’s products and services, what their goals are, and how the client journey the firm provides – from promotion to ongoing client service – supports them to be realised.
- Issuing clear, easily understood communications and promotions so people can make informed decisions, tailoring them where necessary.
- Evolving well trained, empathetic client service that appreciates vulnerabilities are not fixed, that circumstances change and that the firm might need to adapt, too, as a result.
- Thinking pragmatically and proportionately about what a ‘good’ client outcome is for those using the firm’s service.
- Using data to test whether clients are, in fact, those the firm expected to have, and receiving the service they and the firm intended.
- Digesting the work the FCA has published, and will publish, on how the Consumer Duty and vulnerability guidance is being implemented elsewhere, considering what lessons there might be.