FCA Live & Local – Consumer Duty The most fun that a compliance consultant can have with their clothes on


I attended the first London delivery of the Financial Conduct Authority (FCA) Live & Local series in London at the Royal College of Physicians on 28th February. I attended the Retail Investment session in the morning delivered by Mark Goold. I did not stay for the afternoon session on Mortgages and Insurance delivered by Gordon Findlay. A compliance consultant can only handle so much excitement in one day and my bank balance would have said no.

There will be 63 Live & Local sessions, which should have audiences of around 100 people at each session. As ever, the bugbear for the FCA is that the people who attend these sessions are from firms that are already likely to be preparing to embrace the new Consumer Duty and be some way towards embedding the culture in their business.  Sadly, it is probably the firms that do not attend that are in most need of attending!

The sessions are designed to help small and medium sized firms understand:

  1. The background to, and key elements of, the Consumer Duty
  2. The areas firms should consider ensuring they are meeting the new requirements
  3. How consumer duty applies proportionately
  4. The FCA supervisory approach to the implementation of consumer duty

Information for Regulated Firms

  • Visit the FCA Consumer Duty homepage where you will find additional information about the Consumer Duty, on-demand webinars, and the option to sign up for email updates.

Anyway, Mark Goold came with sub-titles for all those that could not understand his accent in the form of a PowerPoint presentation. His delivery is always great. Easy to understand, subject to the caveat above. Realistic expectations. Patience answering questions, however nonsensical. He and Gordon are great public faces for an organisation that receives a lot of criticism. Rightly, in my experience of their authorisations people.

The difference now being that the FCA is gearing up to be able to supervise firms more closely

One of my concerns is that although the FCA wants short, readable suitability letters. advisers have struggled to get past their fear of FOS and CMCs to take the leap to make their suitability letters readable and understandable. Hopefully, Consumer Duty may ride to our aid.

The Consumer Duty is the latest attempt by the FCA to encourage the financial service industry to act with integrity. Following on from:

  • Treating Customers Fairly (TCF)
  • Retail Distribution Review (RDR)– tried to get rid of commission and failed as it got re-badged as adviser fees. Successfully, brought in a higher qualification for advisers.
  • MiFID and MiFID2 the European equivalent the RDR but had more effect of providers as it brought European advisers towards the standards already in operation in the UK. .
  • Senior Managers & Certification Regime (SM&CR)– bringing in personal accountability.

And now Consumer Duty which is described as “TCF on steroids” The difference now being that the FCA is gearing up to be able to supervise firms more closely and may even be building the resource to be able to enforce where poor practices are found.

The SM&CR was designed to bring in an ethical culture at all levels of organisations. The training for this was to engender the embracing of a new culture for everyday practice rather than a sheep-dip, tick box exercise. How people undertake their duties when the boss is not looking. Good practice becoming business as usual practice.

Consumer Duty  

The preparation for firms to comply with Consumer Duty is already ongoing for most firms. Good practice is the review of all documentation and processes. Of course, most firms undertake this exercise on an annual basis. However, this year greater emphasis should be given to the clarity of the documents and procedures in order to put the clients into an informed position to enable them to make decisions on how to achieve their objectives.

For many firms, who already have good ethical practices, any changes will be tweaks rather than tearing up and starting again. It should be remembered that processes and documents should work for the firm to enable them to ensure high quality business and services, rather than the firm working to fit the documents and processes.

For many years, the FCA has wanted advisers and firms to consider their advice to be a standalone product. In 2013, when the RDR was introduced, the FCA would have liked to get rid of commission for firms to move onto fee-based advice, like professionals such as solicitors and accountants. Unfortunately, due to the financial structures of most firms, the need to continue to receive ongoing  payments from providers meant that commission was simply re-badged to adviser fees.


Firms need to consider that their advice makes them manufacturers of a product rather than simply product distributors.  This means considering all aspects of the services that they provide. Both advice and ongoing reviews of advice need to be designed to be consumer centric.

Firms would still need to consider the Consumer Duty in relation to the design of their advice service…or as it says in FCA guidance “the rules apply to the manufacture of products and services…this covers all services including a distributor’s sales processes”

Firms may also be co-manufacturers if they build their own portfolios. Therefore, they would need to collaborate with the providers of their funds of choice, to ensure that everything is consumer centric.

Consumer understanding

  • Understanding of communications
  • Communication channels
  • Ongoing Communication
  • Testing and monitoring

The keeping of records has always been important. Now, it would seem to be even more so.  Keeping evidence of the implementation of the Consumer Duty will be important. Not only have things been done, we should be able to provide evidence that they have been done.


  • The results of the monitoring that the firm has undertaken
  • Any evidence of poor outcomes and the root cause
  • An overview of the actions taken to address such issues
  • Details of steps taken to mitigate potential future risk

The Consumer Duty will mean that advisers will need to spend more time with clients ascertaining:

  • Basic client details and soft facts.
  • Client objectives – short-term and long-term.
  • Possible impediments to client understanding – vulnerability.
  • Client experience and knowledge
  • Attitude to risk:
    1. Investment
    2. Capacity for loss
    3. Borrowing
    4. Lifestyle
  • Investment ethics and beliefs
    1. sustainable/responsible investment
    2. religious beliefs

Then the communication needs to be clearer.

  • Understandable IDD and fee agreements
  • Easy to read reports – possibly with glossaries.
  • Short readable suitability letters – executive summaries with any background information as appendices. Possibly with glossaries in the appendices.
  • Regular reviewing of objectives with understandable solutions to pursue the objectives.
  • Evidence kept of all communications.

Ongoing Service

Adviser firms should be looking to segment their clients according to the service that they are going to provide ongoing.  Adviser firms would normally offer the clients a menu of levels of service. It is envisaged that advisers will look at the client objectives and needs and set the service level in accordance with the level of service that the clients will require to maximise their likelihood of achieving or at least pursuing objectives.

Adviser fees

Running on from the level of service, the adviser fees should be set in accordance with the service level being offered to the client.

The FCA has never set a limit on the fees that can be applied and this will still be the case going forward. The question that the FCA will have is whether those fees offer value to the clients. A large fee may raise questions, but if the advisers can evidence that the clients have received good value with an effective service level, the large fee can be justified.

It is recognised that clients with larger funds may subsidise the other clients due to the level of fees that they are paying. Whilst this is not ideal, it is understood. This should be kept to a minimum by the setting of the service levels for individual clients. Advisers being paid for their time and expertise.


For many firms that are already operating with good business practices and ethics, the Consumer Duty should not make much difference to how they will operate in the future.

It may well be that they will be reviewing and tweaking their documentation and processes.

The main thing that firms should remember is record keeping and evidence of the reviews that they have undertaken in preparation to comply with Consumer Duty.

Attending these Live & Local events comes with a very strong recommendation.  For information, visit this link.  https://tinyurl.com/bdz9hztr I am sure that many advisers and firms will attend to hear about the Consumer Duty “from the horse’s mouth” I am sure that Mark and Gordon do not mind this equine comparison. They have probably had worse.

I was delighted to find FCA merchandise in the form of a pen. At first, it did not work. Then with a bit of effort, it began to perform as expected.  Perhaps this is a lesson to us all in our ongoing relationship with the FCA.


About Author

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TC Compliance Services Tony Catt is a freelance compliance consultant working with several firms of different sizes. "I have previously been an adviser, which gives me a good understanding of the advice process and dealing with customers and I enjoy a close relationship with my adviser clients"

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