St James's Place scrapping exit fees for the vast majority of new investment bonds and pensions is the first example of consumer duty beginning to take hold, according to this week's FTAdviser podcast guests.
Appearing on the podcast, Alison Gay, senior public affairs consultant at the Lang Cat said “this is the first really high profile example of consumer duty starting to bite”.
Last week, SJP announced an overhaul of its charging structure and said there would be a revised structure for new investment bonds and pensions which will operate with an initial charge and ongoing charges but without any early withdrawal charges.
In addition, charges across all its wrappers, which have historically been disclosed primarily on an all-inclusive basis, will be separated into component parts.
Gay said: “All four outcomes [in the consumer duty] have something to do with fees.
“The very first example of a success measure that the FCA gave in the policy statement is monitoring of Fos final decisions on complaints about fees.
“They were very much front and centre about the fact this was what they were going to be looking at.”
Gay said that price and value means advisers have to be charging something sensible and justifiable.
The consumer duty also looks at the design of products and services, and particularly talks about behavioural biases.
“People tend not to be so worried about things they're going to have to pay for in the future,” she said.
“So that's how firms can get away with charging some things when they might not be able to charge other fees upfront, so anything in that space is also relevant.”
Meanwhile, Matthew Connell, director of policy and public affairs at the Chartered Insurance Institute, said every firm has its own business models, its own costs, its own services and it has to assess what the right level of fees are in that environment.
“Certainly, for us at the PFS, we can talk a lot about regulation but actually behind regulation is the fundamental thing that all markets have to have which is trust with clients,” he said.
"It's not surprising that firms do make changes from time to time because no market can exist without a basic level of trust between client and the financial services firm that they're dealing with.”
sonia.rach@ft.com