A survey conducted by Air revealed that 79 per cent of people over the age of 45 do not know about the new rules and 38 per cent are unaware of what the Financial Conduct Authority (FCA) does.
Women were less likely to know about regulation, as the poll found that 17 per cent of women knew of Consumer Duty compared to 26 per cent of men.
Similarly, more men knew about the role of the FCA with 70 per cent saying so compared to 56 per cent of women.
Just nine per cent of respondents said they knew what consequences the UK financial services sector would face if things went wrong, while only three per cent expressed an understanding of the specific measures, actions and requirements of regulation.
Among those who knew about Consumer Duty, half were confident that it would have a positive impact on consumers. A tenth believed the impact would be negative, while 18 per cent said the change would be significantly positive.
What good outcomes look like
Despite the low understanding of Consumer Duty, the respondents gave their opinions of what good consumer outcomes looked like to them. Some 44 per cent said this meant a clear explanation of fees and charges, 34 per cent said checks and balances to avoid fraud, while 27 per cent said ease of contact mattered.
A further 26 per cent said good outcomes came from an understanding of the appropriateness of fees and charges for the product or service provided, which 24 per cent said literature that was clear and not misleading was important.
Paul Glynn, CEO of Air, said: “While it will come as no surprise to many that the regulatory changes that the industry has been working on for the past year have not hit the radar of the most consumers, the standards that they expect from financial services companies are clear and will be delivered by this regulation. The need for customers to be protected from fraud and scams is something that the later life lending industry is arguably not only doing but is a step ahead with the use of independent legal advice and a real focus on supporting vulnerability.
“However, the desire for fees and charges to be appropriate and clearly explained goes to the heart of fair value and is something that as an industry, we need to ensure we listen to. The remuneration that advisers receive needs to be commensurate to the high-quality service provided and we should not be afraid to question the status quo with the objective of providing good customer outcomes.”
He added: “Customer understanding and support are also part of the outcomes that Consumer Duty seeks to deliver, and this research clearly underlines how important customers think these issues are. As an industry, this new legislation provides us with the opportunity to review our systems and processes to ensure that following the end of July, we are better positioned than ever before to support the increasing numbers of older borrowers who seek our advice.”
Advisers should be translators
The release of the survey follows the Air National Later Life Lending Adviser Conference which was held at the British Motor Museum in Warwick on Thursday.
Speaking on a panel, Oliver Lewis-Jones, associate director of Deloitte, said “consumers shouldn’t have to know about the duty or regulations to receive good outcomes”.
He said the key point was to monitor outcomes on an ongoing basis and making sure customers understand what kind of outcomes they should be getting.
“Customers won’t always know, some customers may recognise if they’ve received a poor outcome, but they don’t know what they don’t know,” he added.
Stuart Wilson, chairman of Air Club, said “a good adviser’s job is as a translator. A translator of product features into customer benefit”.
He said Consumer Duty was an opportunity to go back to basics and make things understandable for people with less financial understanding.
