What is your duty of care to clients?

The FCA is consulting on a duty of care. What does this mean for you? How can you prepare?

The FCA has seen plenty of evidence that firms are not developing products and services that work for retail clients. Failures to focus management time and energy and firm’s resource on product/service development, systems, customer service, complaints and client information have led to consumer detriment. Services are provided ‘because they must be’ as a commercial imperative and not ‘because they should be’.

What does the FCA want? For firms to treat all customers fairly throughout the entire process, whatever the size of the firm or the nature of the activities they undertake. The changes proposed will set a higher standard of care and expectation beyond the FCA’s current set of Principles and Rules.

Firms should consider the risk of ‘consumer harm’ in every step of their customer journey. This means considering how they follow product governance and distribution requirements, the information they supply (and should supply) to consumers and every aspect of consumer service from websites, contact centres through to complaint handling and resolution.

These are the basics. And essentially, asking if as a firm you are actually ensuring customers are not simply a line on the P&L statement but considering their entire experience.

Firms should not think a review of these requirements stops there. All retail facing firms (or those who provide products or services which reach retail customers) must take additional care to ensure they meet the needs of those in vulnerable circumstances and at greatest risk. Do read the FCA’s recently published guidance in this area.

Expect the FCA to really focus on how you are looking out for vulnerable clients and request MI. Who do you consider is vulnerable, how are individuals identified, by whom, how are staff trained, changes in processes and Board oversight…