Nurturing trust and loyalty: The fourth pillar of Consumer Duty

Within financial services, a duty is bestowed upon those who guide the financial destinies of individuals and families. This duty is encapsulated in the fourth – and final – pillar of Consumer Duty.

The concept of ongoing consumer support, as outlined in this pillar, is a testament to the holistic approach that professionals in this field must adopt to ensure the financial well-being of their clients.

Continuous assessment of foreseeable harm

The fourth pillar underscores the paramount need to foresee and mitigate potential harm that clients may encounter. In the world of finance, no decision is devoid of risk, but what distinguishes a responsible financial adviser is their unwavering commitment to safeguarding the interests of their clients.

This involves regularly assessing the possible harms that clients could face, indicating a thoughtful and considerate approach towards financial planning. It means acknowledging that the financial landscape is ever-changing, and as such, being proactive in identifying and addressing potential risks is essential.

Crafting a fortress of support

Consumer support hinges on the intricate dimensions of a financial advice service. These dimensions form the bedrock of an efficient and trustworthy support system that caters to diverse consumer needs.

Convenience and ease of interaction, particularly through digital channels, stand as pivotal factors. The seamless accessibility and user-friendly interface not only facilitate engagement but also aligns with the contemporary consumer's preferences, fulfilling their demand for hassle-free interactions.

Furthermore, the multiplicity of interaction – ranging from face-to-face consultations to digital platforms – embodies the essence of consumer choice, ensuring that individuals engage in manners that suit their comfort and requirements. However, paramount to this framework is the safeguarding of vital personal data. The service's ability to uphold stringent security measures not only fosters trust but also satisfies the consumer's fundamental right to privacy.

Reliability and accuracy in maintaining records play a crucial role in cementing consumer trust. The assurance of consistent and precise documentation further solidifies the foundation of consumer support.

Co-creation, an increasingly valued aspect, emphasises collaborative efforts between consumers and the service, fostering a sense of partnership and ensuring that advice aligns intricately with individual needs. Additionally, the ease of updating these records embodies adaptability, allowing for a dynamic and responsive support system.

However, a vital facet often overlooked is the protection of advisers within this service ecosystem. Implementing digital trails, secure messaging systems, and evidence-based outcomes shields advisers and ensures the sustainability of the support system. These dimensions collectively form the crux of a robust advice service, indispensable in fulfilling the fourth pillar of consumer duty in its truest essence.

The role of technology in supporting Consumer Duty

In the digital age, technology serves as the bedrock for fostering transparent and secure communication between advisers and clients, elevating the essence of Consumer Duty's fourth pillar.
Portals designed for easy communication streamline exchanges between advisers and clients, fostering a seamless dialogue where queries are promptly addressed, and decisions are made collaboratively. These platforms, fortified with bank-grade security measures, not only facilitate swift information transfer but also shield clients from cyber threats, ensuring the sanctity of their financial data. The integration of digital Know Your Customer (KYC) and Anti-Money Laundering (AML) checks further fortifies security, establishing a robust shield against potential risks.

Additionally, the advent of digital tools has revolutionised the landscape of financial assessments and risk profiling. Digital Attitude to Risk Questionnaires (ATRQ) simplify and expedite the process, allowing clients to effortlessly complete and submit their financial details, avoiding clunky, outdated, methods of returns while also allowing for selected sections to be sent prior to annual reviews each year, with prior versions stored for records.

Furthermore, customisable Fact Finds eliminate the arduous tasks of writing, scanning, and mailing documents, enabling a frictionless experience that encourages clients to actively engage with their financial planning.

These innovations not only enhance accessibility but also enable advisers to comprehensively gauge and tailor recommendations, ensuring a more personalised and effective financial strategy for each client. Finally, the integration of digital Environmental, Social, and Governance (ESG) profiles aids in aligning investment strategies with clients' ethical and social considerations, promoting responsible and mindful financial decisions.

The fourth pillar of Consumer Duty is a pivotal element of responsible financial advisory services. Advisers who embrace this duty understand that the relationship with their clients goes beyond the mere provision of financial products.

It is about nurturing trust, fostering loyalty, and serving as a beacon of financial guidance and support throughout the ever-changing journey of personal finance. Financial advisers will say this is business as usual for them, but now, they need to use the technology available to prove it as well.

As technology continues to evolve, advisers must remain agile and responsive to best meet the needs of their clients and fulfil this essential duty.

---

Stephen Mitchell, Head of Adviser Product Strategy, FE fundinfo

This article first appeared in Professional Adviser on 8 December 2023