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Focusing on customer outcomes is good but rules should already do that – poll results

  • 20/11/2019
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Focusing on customer outcomes is good but rules should already do that – poll results
Brokers agree that the Financial Conduct Authority (FCA) should shift its focus to consumer outcomes, but have reservations around how this will work in practice.


The FCA’s executive director of strategy and competition Christopher Woolard recently said the regulator wanted to move away from its “narrower compliance” with its rules and instead look at how well those in the financial sector serve their clients. 

Mortgage Solutions’ latest reader poll asked: ‘Is the FCA right to consider prioritising customer outcomes over rules compliance?’ 

Some 69.4 per cent of brokers said the regulator was right to consider this move while 25 per cent disagreed. Some 5.6 per cent said they didn’t know whether the FCA’s suggestion to focus on customer outcomes was the right choice to make. 


A step in the right direction 

Overall the brokers we spoke to thought this was a good decision by the regulator. 

This included Anthony Rose, director of LDNFinance, who says this “should be welcomed by advisers”, and adds: “A top down and prescriptive approach can often have unintended consequences which end up putting the client in a detrimental situation, which is the last thing the regulator should be wanting to achieve.” 

He went on to say that focussing on client outcomes gives the advising firm “greater flexibility and scope” to put the client at the centre, resulting in a “much higher likelihood that the real goals and objectives of the client are met on a more consistent basis”. 

Chris Sykes, mortgage consultant at Private Finance, adds: “If [the FCA] is hindering a customer’s choices or disadvantages them by having strict compliance in place then they need to re-consider their approach. 

“The rules put into place have been put in place for a reason, however, these rules should change over time as required to benefit customers.” 


Regulation should already work for the customer 

Although the brokers we spoke to agree with the majority who said the FCA were right to shift its focus to customer outcomes, it was also pointed out that that was already the understood role of the regulator and questions were raised as to why there was a need to step away from rules as a solution. 

Jeni Browne, sales director of Mortgages for Business, says it is expected that the existing principles of regulation should be aligned to lead to “positive” results for the customer. 

She adds: “Ideally, the FCA should ensure that compliance with the regulation would ultimately lead to the best possible outcome for customers.”

James Chisnall, director of City Finance Brokers, agrees, saying: “Part of me thinks if it isn’t broke don’t fix it, the FCA exists for a reason and that’s to ensure that as financial professionals we’re giving the right advice to our clients. 

“By carrying out our due diligence, the fact finds and working out their priorities we can then tailor a solution to give them what they require. Which is per the rules the FCA has set out for us.” 

He adds: “The customer gets the right outcome because we follow a set of procedures.” 


Structure still needed 

In contrast to the regulator’s intention to step away from the rigidity of compliance, brokers suggest there may still be a need to formally guide the process of prioritising customer outcome. 

Chisnall says it will be “interesting” to see how the practice is implemented as brokers are already “all about the consumer” and adds: “In theory it’s great to have less red tape but how can that then be policed?” 

“I’m concerned that by changing that, people won’t follow procedures. We need to be told how to do it and that’s what is giving people the right outcomes as it stands,” he adds. 

Vikki Jefferies, proposition director at PRIMIS, says: “It’s also important to remember that the regulatory framework is in place to protect customers.

“As such, compliance protocols should be viewed as structures which can help brokers, rather than hinder them, when it comes to achieving the best outcomes for their clients.”

Referring to the poll respondents who say ‘no’ to the FCA focusing on customer outcomes, Chisnall suggests it is because they may feel some “confusion” as to how it’ll be enforced, while Sykes adds it’s likely they responded negatively because “when there are no defined rules there becomes a grey area which could potentially be taken advantage of.” 

As for those who say they ‘don’t know’ Chisnall adds this might be because brokers “think it’s going to remove some rules and we like a rule”. 

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