Back to some kind of normal service this week, siblings, after last week’s begging note. I’ll return to that in a moment, but for now it’s your actual March, the sun’s shining, I saw the Northern Lights for the first time ever the other night and on balance things could be a lot worse. So – assuming you are also feeling mildly optimistic – it’ll be a pleasure to annihiliate that feeling comprehensively with this week’s Update.
But before all that, a quick word about last week’s Rock For Ukraine gig. So many of you donated even without being tied to a chair and forcibly pocket-picked, and 200 hardy souls came along to Stationers’ Hall on Thursday, for drinks, dancing and being repeatedly shouted at for money by various miscreants. All told we have raised a wonderful yet deeply frustrating £49,000 for Refugee Support Europe, and that ain’t nothing. Thanks to everyone involved; you all know who you are. And if you’d like to help us get up over the £50k mark, you can do so here. Don’t leave us on £49k…
Since I last wrote anything coherent, we also did our big Home Truths show in London. If you’d like to catch up with the day, we’ve started publishing the videos on our YouTube channel – you might start here with the video sting that started the day off. Still makes the hair on the back of my neck stand up. And if you want to go deeper here’s a playlist with all the videos.
Right, so all that Niceness aside, let’s spoil the party with some new Consumer Duty stuff. M’colleague Mr Michael Barrett took a moment away from his bike rides to attend an FCA Consumer Duty seminar yesterday and what follows is a precis of what he heard. Bear in mind that I’ve stripped all forms of nuance out of this (and improved the grammar) so treat it as something to get the wheels turning in your twisted, blackened minds and you’ll have it about right.
Firstly, the topic of value for money is going to be a battleground. I don’t like VFM as a topic, and regularly invoke the Angry Value Pixie whose job is to remind people that value is subjective and experiential and can’t be measured by you, or me, or regulators or anyone else. Despite me regularly collaring anyone banging on about this total mince and subjecting them to the dark ministrations of the Pixie, the FCA spent some time on whether ongoing advice fees for all clients represent fair value. Phrases like “exploiting consumer loyalty and inertia” and “pricing clusters” will give you a sense of what’s going on here.
We’re starting to think that much of Consumer Duty will be relatively mechanical and straightforward for firms. But VFM tests might not be. If the regulatory direction of travel from RDR and PS13/1 through to all this is that the amount you charge for advice should be related to the effort involved, then that surely means percentage charging has to get much more dynamic than “I charge 0.75%”. This one isn’t going away any time soon.
Secondly, remember this phrase: “design, influence, create, develop, manage or bespoke.” If you do any of these to an investment or platform then you are a co-manufacturer and a bunch of new responsibilities come along. Too much to go into here, but we’ll return to this, whether you like it or not. It’s fine to be a manufacturer of a product if you’re an advice firm, but you have to make that real and the more real you make it the more you look like a provider.
Finally, we need to talk about due diligence. FCA was clear that “all elements of your CIP should be reviewed at least annually.” You’re going to need to have a defensible, systemised, repeatable process for this. And what you use as positive and negative criteria are under the microscope too. This has particular implications for service as a screening mechanism – if all platforms are complying with the Duty then they’re all giving good service, so you can’t use “X is expensive but gives good service” as a reason. It’s fair to say that the room had a bit of a laugh at that one. But this stuff is shifting, and we think we know where it’s going. To us, DD is going to become a quarterly effort when done right, and a lot of it is going to be ensuring that, in your view, the providers you use are complying properly with the Duty as you understand it. We have a dog in this fight – we think we’ve got the method and system cracked and the data in place – but even if you don’t use us to help keep an eye on what we publish over the coming weeks on this topic and maybe use it to inform your thinking.
- New cats! We welcome Gail Robinson, late of Architas, to our communications business where she’ll be helping our comms clients be clear, fair, not misleading and also not dull. Also we welcome Jenny Smyth, late of Verve (and singer for Consumer Duty) as our new marketing manager. Please be lovely to them both if you come across them on your travels. That makes 25 cats in the basket now…and more to come…
- You know how you all gleefully put the boot into S*P whenever you get a chance? Turns out their face may not be all that bovvered…
- Interesting bit from AJ Bell on ‘core advice’ here – not many advisers fancy it. You can lead a horse to water but you can’t make it offer cut-price services…
- The latest Podcat offering has Tom chatting to Andrew Tully of Canada Life about the FCA’s retirement income thematic review, the forthcoming Budget and reflection on what a Labour government could mean. Watch it here.
- And your music choice this week – easy one. There’s a new Insomnium record out and I know you’re as excited about it as I am. I’ll be honest, it’s not up to the standard of Winter’s Gate, but what is, amirite? But it’s still excellent, and so please cuff your ears to eight and a half minutes of melodeathblackfolk goodness in the form of Godforsaken. You’ll be glad you did.
See you next week