Ignore new Consumer Duty rules at your peril

"Consumer Duty is likely to herald the end of – what I call – ‘rock lobbing’ within advice."

Some might be sick of this already, but you ignore it at your peril, and the good news is the sheer amount of resource, support and help that is available to firms in order to help them get their Consumer Duty houses in order.

What has been interesting to me around the nature of Consumer Duty, particularly for advisers, is how it draws together a whole range of products and services with the suggestion that firms can no longer neglect the needs of their clients in non-core areas.

For example, I’ve noted in the residential mortgage market space a lot written about the provision of protection advice and other ancillary products and services. The argument being that protection is so inter-twinned with mortgage advice, that it is merely storing up trouble for the future if the firm does not, at the very least, talk through the protection option.

There appears to be a similar situation in the later life space, and to my mind, Consumer Duty is likely to herald the end of – what I call – ‘rock lobbing’ within advice.

By that I mean the temptation to view the wants and needs of clients outside the core equity release/later life lending advice proposition, to understand the potential solutions available, but to effectively say to the client, ‘You should definitely do that’, but then leave them to their own devices to source those products or solutions elsewhere. Rock being lobbed.

In our space, this can happen a lot when it comes to legal services and estate planning, so for example, an adviser can absolutely recognise the client has need of a will or an LPA, or they need policies written in Trust, but they offer no solution via them to actually achieve this.

In other words, here’s the will/LPA/Trust rock, catch it, and go out sort out what you should do yourself.

Now, of course, many advisers might feel they are ill-equipped to be able to deliver this advice themselves, or they might not have the necessary skills, qualification, experience, authorisations, etc, to be do this.

However, when it comes to Consumer Duty I get the feeling this ‘excuse’ just isn’t going to wash, because even if all of the above is true, then you certainly have the opportunity to discuss these issues (as a minimum) with the client. For the most part there are also ways and means by which you can introduce them onto a specialist in this area you are confident will deliver good outcomes, to ensure they get exactly what they need.

While these customer outcomes need to remain paramount, at its most base commercial level, choosing not to ‘rock lob’ any more is likely to provide you with an extra income and revenue stream that you are missing out on by leaving clients to go elsewhere.

In the estate planning sector mentioned above, Air has an arrangement with a UK-wide operator who is fully immersed in this market, who accept introductions from later life advisers, who take the client through their needs, and present them with the solutions required.

Which means income for the introducing adviser, and it also ensures the client has secured all the product/service solutions in this area, and greatly mitigates against any future complaint which suggests the adviser did not fully-service their needs at the time of the original advice.

As we know, Consumer Duty is all about presenting the best consumer outcomes and only making introductions if the service represents fair value for the customer when considered in the round with the product itself. Ifif that means having to ‘work’ beyond the core service offering to do so, then advisers and firms are going to need to embrace this.

The positive news is there are plenty of options to allow them to do this – no-one is suggesting you become an expert in these sectors, but certainly use your expertise to make these sectors and solutions accessible to your client base.