5th May 2023

Has consumer duty worked for you?

Whist the concept of Consumer Duty is highly laudable, the world of financial services has been plagued by the failure to use plain English, which I think is at the core of some considerable consumer detriment. 

In keeping with post millennium modern thinking of TCF, that cost a fortune to design and implement, this has now, seemingly, been re-badged and it is to be known, going forward as Consumer Duty (CD). 

Was this yet another attempt to get the delivery of financial advice and the associated products much simpler, or make it more complicated

As the 31^st July approaches, how did it get to this stage? 

During my, some 40 years in the industry, overseen by NASDIM, FIMBRA, PIA, FSA and FCA I have seen regulators go out of their way to make life more complicated for consumers and regulated firms, most often to justify an existence. And when they failed, another regulator was born, often with the same staff, to try getting it right all over again and failing, a form of perpetual motion?  

Over the years we have seen rules replaced by principles then discarded. Principles opened the door for retrospective regulation opportunities undreamt of. 

This sounds for many small firms like more work they just do not need, more costs in working it all out or paying somebody else to work it out for them. 

Looking at this with a cynical eye perhaps many could be asking, “I thought as an IFA I already did this? After all wasn’t that what the TCF initiative was all about way back in 2015”? 

Is this latest regulation mission a case of the ‘Emperor’s new clothes? 

The FCA has said the consumer understanding and outcome of consumer duty should benefit firms by reducing complaints and driving healthy competition.  

Its aim being to reduce poor outcomes by improving the information individuals are given about a product or service. 

An acronym that regulators really should think about more is KISS. Keep it simple, stupid (KISS) is a design principle which states that designs and/or systems should be as simple as possible. 

Wherever possible, complexity should be avoided in a system—as simplicity guarantees the greatest levels of user understandings, acceptance, interaction, and outcomes.

It is a principle that in fact should be a rule for creating regulation that works. 

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