What are the four FCA Consumer Duty outcomes and what actions can I take as an adviser to generate best outcomes?

The Financial Conduct Authority (FCA) Consumer Duty set to transform the financial services industry in the UK by prioritising the interests of consumers and promoting transparency.

In this blog, we'll consider the regulation not simply from the perspective of how to comply but how, as an equity release adviser, you can use this framework to improve the service you provide to your clients, including the continuous improvement actions you can take to fulfil your regulatory obligations and improve your competitive position.

1. What is the Products and Services outcome?

The Products and Services outcome expects you to provide products and services that meet the needs of your customers, and ensure that products and services are suitable for your intended audience, and that they are designed to meet their requirements.

Products and services must also be of high quality and delivered in a fair and transparent way. This includes being clear about the costs and risks associated with your products and services, and providing customers with all the information they need to make informed decisions.

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In addition, products and services are accessible and easy to use, taking into account the needs of vulnerable customers, such as those with disabilities or low levels of financial literacy.

Products and Services outcome - what continuous improvement actions can advisers take?

Implement and strengthen robust fact-finding processes to gather thorough information about your clients' financial circumstances and goals.
Perform clear and detailed assessments of clients' suitability for equity release products.
Fully document all advice given, justifying recommendations based on individual circumstances.
Regularly review and update advice to reflect changes in clients' circumstances and preferences.
Stay informed about industry developments and regulatory changes to provide accurate and relevant advice.

2. What is the Price and Value outcome?

The FCA expects you to ensure that your prices are fair and transparent and that your products and services offer customers good value.

You also need to ensure that your pricing structures are clear and easy to understand by being transparent about the costs associated with your products and services, and providing customers with clear information about the fees and charges they will incur.

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In addition, you need to demonstrate that your pricing structures are fair and reasonable and don't unfairly disadvantage customers, by means such as charging excessive fees or using complex pricing structures that are difficult to understand.

Price and Value outcome - what continuous improvement actions can advisers take?

Regularly and rigorously evaluate all equity release products on the market to determine which ones offer the best value for your clients. This requires a comprehensive understanding of the product features, costs, and long-term benefits.
Transparent communication: you must clearly communicate the costs and benefits of equity release products to your clients. This includes providing detailed explanations about the pricing, potential risks, and the long-term financial implications.
Regular training: advisers should keep up-to-date with the latest FCA guidelines and industry developments. Regular training and professional development can help you stay compliant and ensure you are offering the best advice.
Maintain records: documenting all interactions and advice given to clients will help prove compliance with the FCA's Consumer Duty. These records should clearly demonstrate how you assessed the product's value and communicated this to your client.

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3. What is the Consumer Understanding outcome?

The Consumer Understanding outcome expects advisers to ensure that their customers understand the products and services they are buying by providing clear and concise information about your products and services, including the risks and benefits associated with them.

You need to make sure that your customers understand the costs associated with your products and services by providing customers with clear information about fees and charges, including any ongoing costs.

In addition, you need to provide your customers with clear and concise information about the terms and conditions of your products and services, including any restrictions or limitations.

Customer Understanding outcome - what continuous improvement actions can advisers take?

Review and streamline all client communication materials, ensuring clarity and simplicity.
Invest in training programs to equip you and your team with effective communication skills.
Provide clients with written materials that clearly outline the costs, risks, and terms of equity release products.
Use a range of visual aids, examples, and interactive tools to enhance consumer understanding.
Regularly review and update information to reflect regulatory changes and industry developments.
This may involve simplifying complex terminology, using visual aids, or providing examples to help clients better understand the risks and benefits associated with equity release products.

4. What is the Consumer Support outcome?

The FCA expects firms to provide ongoing support to their customers, ensuring that their customers have access to the support they need to make informed decisions about their financial products and services.

You're expected to provide customers access to knowledgeable and helpful staff who can answer your clients' questions and provide guidance, by investing in training and support to ensure you and your team have the skills necessary to provide excellent customer service.

Firms also need to ensure that their customers have access to support when they experience financial difficulties, including debt advice and other support services that can help them manage their finances effectively.

Customer Support - what continuous improvement actions can advisers take?

Establish a system to efficiently address and resolve consumer queries and concerns.
Implement clear communication channels and ensure a timely response to consumer enquiries.
Invest in training and development, ensuring adequate product knowledge to offer support.
Provide clients with self-service tools like online portals or mobile apps to manage their accounts and seek support.

The FCA Consumer Duty creates significant regulatory obligations for equity release advisers; by taking proactive actions, such as reviewing and enhancing communication materials, providing ongoing support, and tailoring advice to individual needs, you will not only ensure compliance but also foster trust and confidence among your clients, and generate best outcomes.

Additionally, by embracing these regulatory obligations, you can contribute to a consumer-centred and transparent financial services industry in the UK.