According to the TMA Club, one of the most popular questions to their broker support desk from directly authorised brokers is around the scope of the regulation.
This includes who and what the guidelines will apply to, with brokers particularly keen to understand how it will apply to all the products and services they sell.
Consumer Duty will apply to all regulated policies, barring group policies such as group life or group private medical policies. The regulation does not apply to unregulated investment buy-to-let mortgage but does apply to a consumer buy-to-let mortgage.
Brokers have also been asking if Consumer Duty applies to them even when they don’t offer advice.
The club said that the guidelines would still apply but the broker would have to ensure all information provided to the customer was in clear and plain English, so the customer understands what is being offered and can make an informed decision.
Brokers asking about meaning of FCA terms
TMA Club continued that brokers asked about the meaning of terms used in the guidance, specifically fair value, customer support and manufacturer.
The firm explained that fair value is the relationship between the price the customer pays and service or product they receive.
The price needs to be reasonable and a low price does not automatically mean fair value, the TMA Club said.
On the customer support side, the company said that the FCA offered examples of offering customer support such as accepting complaints, offering ongoing dialogue to ensure understanding and making claims.
The TMA Club said that brokers would also need to think about whether additional support would need to be provided if a customer had vulnerable characteristics. In such cases, brokers would need to consider a “consolidated recommendation” and the support customers may need from themselves and lenders.
Broker priority is assessing current activity and how to meet four customer outcomes
The TMA Club said that the “priority” for brokers was “assessing what they currently do and how they need to change to meet the four customer outcomes: products and services, price and value, consumer understanding and customer support”.
The firm urged brokers to think about the three cross-cutting rules and the conduct rule which will apply to firms and their staff.
Consumer Duty will also place more focus on how firms interact with customers with vulnerable characteristics, so companies should be able to identify which customers are vulnerable and what actions have been taken to support them.
Lisa Martin, development director at TMA Club, said: “With the Consumer Duty deadline fast approaching for advisers, brokers across the board are working hard to make sure they will be able to meet the requirements laid out in the guidelines.
“TMA Club is committed to ensuring our broker members understand, and adapt to the FCA’s regulations – something which will ultimately help the end-consumer.”
She added: “Particularly in a market where independent advice is more important than ever, TMA Club is providing crucial compliance support to advisers, who in turn can spend more time helping their customers navigate this complex environment.”
