Clients of advice firms have benefitted greatly from a bigger focus on value post-consumer duty, says Lucy Whitehead, but she points to issues when it comes to adviser communication.
The chief client officer at Kingswood Group says firms across the board have placed a great emphasis on providing value for money and making sure clients understand their products.
But these efforts have not yet trickled through to client interactions, in particular to explaining what the Financial Conduct Authority's consumer duty is all about.
In a joint Q&A with Rebecca Anscombe, head of operations & systems at Iboss, part of Kingswood, Whitehead takes stock of the consumer duty a year on, while Anscombe tells us how artificial intelligence and consumer duty can work together effectively.
FTA: Consumer duty a year on – how would you sum up its effect on the industry so far?
LW: We have seen significant activity within the industry as a result of the consumer duty.
It has raised important questions about how the industry demonstrates value and has prompted innovation among tech providers who have introduced new ways to offer support.
However, we have not seen this be replicated in client interactions.
Though consumer duty is meant to support clients, there hasn't been as much communication from firms to their clients about it.
More effort needs to be made to leverage the consumer duty as a tool to clearly explain financial advice to clients and dispel the myth that it is hard to understand.
FTA: Some say the first phase was the big one. Would you agree?
LW: While it was initially a lot to digest, we see significant opportunities ahead, with firms challenging themselves to operate more efficiently.
FTA: Where has consumer duty had the biggest impact?
LW: The emphasis that provider firms have placed on client understanding has been fantastic.
Firms have been gathering extensive feedback on what clients actually understand and working on rewriting brochures, testing new ideas with clients, and developing new technologies to enhance client understanding.
While we haven’t seen that much uptick in conversations held by advisers with clients around consumer duty, the emphasis that providers have placed on clients’ understanding of financial matters has naturally benefitted them, even if they may not realise what is driving the change.
Clients have greatly benefited from the industry embracing the ‘value’ element, with firms now clearly demonstrating the value they gain from their services.
FTA: Which challenges has consumer duty not been able to solve thus far when it comes to achieving good customer outcomes?
LW: More needs to be done to ensure greater collaboration amongst all parties involved in the process.
