Working with our IFA partners: the golden rule


The recent paper from the FCA [FG22/5] prompted me to think about how we work with our IFA partners (our Introducers). Specifically, it prompted me to think about how we can support our IFA partners with their duties under the new consumer duty regs.

The FCA framework (around the ‘’new’’consumer duty described in PS22/9, with guidance in FG22/5) has been developed by the FCA to regulate for a principles based financial services profession in the UK – which impacts on everyone, every firm and every level of business. That includes us and our IFA partners who Introduce clients to us for specialist pension transfers advice.

Our IFA partners (that means you) will want to know that we, as your partner firm, are delivering good consumer outcomes, as per PS 22/9.

What makes a good partner with specialist pension transfer permissions, working with your firm and your clients? What is the golden** rule when working in partnership with other regulated firms?

In the context of specialist pension transfer advice, client understanding is critical. It is absolutely key. And like all interactions with clients, should be evidenced and challenged

I’m going to quote directly from the FCA:

 ’Am I treating my customers as I would expect to be treated in their circumstances?’

Is this the new golden rule for firms offering regulated financial planning advice in the UK? This is a direct quote from FG22-5 [FCA FG22-5, page 24 para 4.4].Let me paraphrase that:

Are we treating your customers as you would expect to treat them yourself?

That is the golden rule, the acid test.Let me walk you through what the consumer duty means for us and our partner IFA firms.

Let’s start by reviewing some of the key parts of the new consumer duty framework – and then look at how and where they apply to clients, our IFA partners and us. Firstly, the  FCA expectations:

1. Provide products and services that are designed to meet customers’ needs, that they know provide fair value, that help customers achieve their financial objectives and which do not cause them harm

We will work with you to provide your clients with products and services that meet their needs over the very long term, not just when we give the specialist pension transfer advice, but when you manage your clients over the long term, in retirement.

2. Communicate and engage with customers so that they can make effective, timely and properly informed decisions about financial products and services and can take responsibility for their actions and decisions;

We video record every meeting. Those videos are accessible in the final suitability report, for both you and your client to reference at any point in the future.

3. Not seek to exploit customers’ behavioural biases, lack of knowledge or characteristics of vulnerability;

Every one of your clients goes through triage videos and friendly challenges at every stage. They have time to think, reflect and challenge.

4. Support their customers in realising the benefits of the products and services they buy and acting in their interests without unreasonable barriers;

We work with your clients and you, to ensure that our specialist advice is suitable for their long term retirement planning objectives.

5. Ensure that the interests of their customers are central to their culture and purpose and embedded throughout the organisation;

Everything we do is focused on your clients. The journey from triage, to abridged advice through to full advice is focused on your client and the your client making informed decisions about each step.

6. Monitor and regularly review the outcomes that their customers are experiencing in practice and take action to address any risks to good customer outcomes.

We work with you after the advice is given to ensure that the handover is smooth and continues to be smooth in the years ahead.

At the very top of our focus, in working with you and your clients, is the new consumer principle:

Consumer Principle, Principle 12, requires firms:

 ‘act to deliver good outcomes for retail customers’

Principle 12 reflects the positive expectations the FCA have of firms conduct, and desire for firms to think more about customer outcomes and place customers’ interests at the heart of their activities. It should prompt firms to ask themselves:

 ’Am I treating my customers as I would expect to be treated in their circumstances?’

The new golden rule in financial services.

Here is a very important example (from FCA) to make it easier to understand: Firms are not expected to protect customers from risks that come from the nature of the product (such as investment risk), where they have complied with their obligations under the Duty and have good reason to believe the customer understands and accepts that risk. This is vital in pension transfer specialist work.

Risk assessment is a key part of our work. It is a key part in several key meetings, discussions and challenges. There are key outputs – all agreed with your client. Remember, the new consumer duty should prompt firms to ask themselves:

’Am I treating my customers as I would expect to be treated in their circumstances?’

The new golden rule in financial services.

As well as the new consumer principle (principle 12), there are four key outcomes. I’m not going to discuss all four key principles set out in PS22/9 (I’ll come back to them at some point in the future). I want to highlight a key output: Client Understanding.

I’m going to change the order here (from the FCA listed order) and put Client Understanding as the number 1 output on my list (not number 3, as the FCA have described the outcomes list). In the context of specialist pension transfer advice, client understanding is critical. It is absolutely key. And like all interactions with clients, should be evidenced and challenged.

Client Understanding outcome

‘’Consumers can only be expected to take responsibility (for their own actions, their own planning objectives and own plans) where firms’ communications enable them to understand their products and services, their features and risks, and the implications of any decisions they must make.’’ I have paraphrased this from the guidance issued by the FCA – and they go on:‘ We (the FCA) want firms to support their customers by helping them make informed decisions about financial products and services. We want customers to be given the information they need, at the right time, and presented in a way they can understand. This is an integral part of firms creating an environment in which customers can pursue their financial objectives. When interacting directly with a customer on a one-to-one basis, where appropriate, tailor communications to meet the information needs of the customer and ask them if they understand the information and have any further questions. Firms should test, monitor and adapt communications to support understanding and good outcomes for customers.’’

In other words, it is education first. We will help, support, guide, mentor and advise your clients as to the choices, risks and options.

They go on and describe further:

‘’Effective communications are those which can be understood by the customers. Firms should check that communications can be understood by customers, so they can make effective decisions and act in their (best) informed interest. For example, by layering information, making communications engaging, relevant, simple and timed well.’’ You will be pleased to note that in all our interactions with your clients, ‘’Client Understanding’’ is at the forefront of our advice and our advice process – which is designed to enable time for reflection and challenge at every step. In fact, our traditions and foundations in education and training are at the heart of our advice: it is always education first for your clients. In summary, in consideration of the new consumer duty (PS22/9) and client outcome ‘Client Understanding’:

  1. Start with education;
  2. Challenge the client and inform their understanding;
  3. Explain the service, the cost and the value.

If you are reviewing your partnerships to ensure that they operate with PS22/9 and FG22/5 at the core of their business, then look no further. For more information on Expert Pensions Advice please email

Footnote: quoted directly from FCA 22/5 and PS22/9 papers


About Author

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Dubbed by friends and colleagues “The Pensions Professor”, John Reynolds is widely acknowledged as one of the country’s leading experts in the financial services education sector. He has spent 20 years teaching, consulting, mentoring and writing on the subjects of pensions and investments. John’s unique ability to take his years of experience and technical knowledge and present it in an easy to understand format, has resulted in his talents being very much in demand. His portfolio of corporate clients include CII, Lloyds, Scottish Widows, Santander and Wesleyan; as well as numerous IFA clients whom he provides technical consultancy, mentoring and training on client case studies and staff training.. He has put his extensive expertise (and heart and soul!) into developing the expertpensions (EPL) proposition. EPL is a structured and interactive technical exam training programme for IFAs. It's designed to give financial advisors the required technical knowledge, study strategy and exam technique to confidently sit and pass the AF1, AF3, AF4 and AF5 exams. Its online, it's fully supported, structured and designed to help advisers reach Chartered Financial Planner status quicker. It's ready to help your advisers reach chartered status

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