Companies have also found to be lacking when it came to recognising a complaint before them, which can be detrimental to the insurer’s willingness to cover a payout.
Holman explains: “A complaint can be picked up by anybody in the team, so a distinction between is somebody actually making a complaint [or not can be tricky]. [Sometimes] they think they may be and they fudge it, they try to wash over it, and try to placate the complainant and so they don’t have to record it as complaint, for example, or notify PI. People panic that it’s going to increase their [professional indemnity insurance] premiums.
“What tends to happen if you’re not treating it properly, things escalate and then all of a sudden it is a proper complaint.” A PI insurer may then not cover the claim if it was not notified in time, she adds.
Holman says there is also a misconception that advisers do not have to deal with complaints until they are put in writing, which is wrong. Even verbal assertions that a client is not happy need to be actioned as complaints.
A heavier burden
Innocent oversights may not invoke bad consequences, but there are some regulatory requirements that will become turbocharged under the consumer duty and the regulator may not take too well to non-compliance in these areas in future.
One such requirement is to ascertain a client’s environmental, social and governance preferences, and Holman feels “there’s a lot of work for firms to do in this area”.
Under existing Conduct of Business Sourcebook rules, in order to really ascertain a client’s objectives, their ESG objectives have to be taken under consideration, she says.
Even if a client does not appear interested, "you still have that obligation to properly delve down and ask that question of the client, and then also have the knowledge to have a decent conversation [about ESG]", she says.
The FCA's new ESG investment labels should help explain these products to clients, but companies should ensure that ESG is part of their process, as at the very least the consumer duty's cross-cutting rule to enable and support retail customers to pursue their financial objectives requires it.
Companies that are not prepared to do an ESG offering should have an alternative plan in place such as using a discretionary investment manager or lose the client.
