Happy Consumer Duty day 🎁
— Tom McPhail (@PensionsMonkey) July 31, 2023
In my worktime, I’ve seen remarkably few days where the regulatory framework changed. For consumers they included
A day when the polarization between independent and tied advice was recognized and financial advice became a regulated activity
The Retail Distribution Review – which ended the payment of commission on investment driven financial products
The Consumer Duty is a third paradigm shift in four decades and it’s the most subtle. The duty of care that is enshrined in trust law is now extended to all consumers of financial products from car insurance to personal pensions.
It is very welcome. It will shift the regulatory focus towards the outcomes of the products and services we buy and away from the bureaucracy that surrounds the point of sale.
So consumers will have cause to judge the products they purchase (including advice and guidance) on the basis of their utility. This may seem obvious – many will point to the tag “caveat emptor” and ask why we need further intervention.
The answer lies in the debris around our feet from PPI to BSPS. We tend – left to our own devices – to put ourselves first and the consumer second and this has to stop.
So Happy Consumer Duty Day, may we remember 31st July 2023 as the dawning of a new era.
Will the Consumer Duty achieve what “Treating Customers Fairly” (remember that?) apparently did not? Perhaps the key will lie in how it is supervised and enforced – and how its success is assessed over time.