PIMFA warns firms not to be Consumer Duty Zombies 28 days before deadline

3 July 2023

PIMFA warns firms not to be Consumer Duty Zombies 28 days before deadline

PIMFA, the trade association for wealth management, investment services and the personal investment and financial advice industry, is warning advice firms and wealth managers not to be “Consumer Duty Zombies” as it marks 28 days until the deadline to comply with the new regulatory regime.

While a majority of firms have heeded the Financial Conduct Authority’s (FCA) advice that the Consumer Duty represents “a watershed moment” that they should take seriously, there may still be a few firms that have yet to act.

PIMFA is reminding those firms still to act that there is a wealth of high-quality, original information, as well as numerous helpful resources that will enable them to comply with the Consumer Duty regime on its website, which it would encourage firms to access.

In addition, PIMFA has published a FREE Consumer Duty paper, in partnership with several of its expert associate members including KPMG, DAC Beachcroft, Shoosmiths and Altus Consulting, which focus on sharing insights around areas that the FCA highlighted as being of particular importance when they spoke at a PIMFA CEO Consumer Duty Roundtable in March.

At the event the FCA set out seven questions they are likely to ask firms, when the Consumer Duty comes into force, indicating what the FCA is thinking and its approach. Those questions are:

1. What are you doing to segment your clients based on different outcomes?
2. Do you have the data and management information to track the outcomes related to each client group?
3. What impact has this segmentation work had on your charging models?
4. What is the proportion of clients for whom ongoing service charges genuinely represent fair value?
5. What changes will you make to remuneration models to shift to an outcomes-based focus?
6. To what extent do you need to change employee behaviours – how are you doing that, how will you track progress, and how do you know you have succeeded?
7. What assurance do you need regarding discharging of your personal responsibility under SMCR?

As has been warned before, the FCA’s expectation is for a cultural shift where the firm’s mindset and all product lines are aligned to deliver good outcomes for consumers. Existing product governance, code of conduct frameworks, and vulnerable customer strategies can provide a foundation for firms to build on to meet the requirements of the Duty.

The FREE PIMFA paper includes:

• A summary of the Consumer Duty requirements and some of the challenges firms face
• Practical guidance on likely FCA expectations
• Steps firms should be taking to meet them, based on each of the questions above
• Tips for firms on substantive compliance and what this means in practice
• And a ‘Consumer Duty Self-Assessment tool’ by Altus Consulting. This is a free tool to help firms assess their progress in complying with the Consumer Duty against a common industry benchmark

Alexandra Roberts, Head of Regulatory Policy and Compliance at PIMFA, commented: “With just 28 days to go until the Consumer Duty comes into force it really is time for firms to make sure they are ready, or at the very least, on course to be ready by 31 July.

“Firms have been warned before, but it bears repeating that the Consumer Duty is not just an extension of Treating Customers Fairly. The Consumer Duty will bring about fundamental changes to the way in which firms are supervised and regulated and requires a cultural shift in attitudes.

“If any firms still need help there are lots and lots of resources on the PIMFA website but the team and our associate members are also happy to help so please use the information and resources available to ensure you meet the deadline.”

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Notes for Editors

About PIMFA – the Personal Investment Management & Financial Advice Association

• PIMFA has been named one of the best places to work in the UK. Find our more here.
• PIMFA is the trade association for firms that provide wealth management, investment services and the investment and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
• The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
• PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies.  Associate members provide professional services to the PIMFA community.
• PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients,has bee providing responsible stewardship for their long-term savings and investments.
• PIMFA has made numerous recommendations to the FCA regarding the Future of Advice, Future of Supervision and the FSCS levy – read more.
• PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
• Further information can be found at pimfa.co.uk

Contact

For further information on this release or other press matters please contact:

Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376

Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225