- embedding the regulations into their existing processes
- watching out for good practice from the rest of the industry
- preparing for potential further updates on the rules from the FCA.
But there’s one other important action required under the rules.
In this new regulatory environment, most firms are not only considering their own compliance obligations, but how meeting these obligations may depend on others.
As distributors of other organisations’ products and services, advisers need to check that these are fit for purpose and how they help to deliver their service.
For most firms, this means re-examining how they carry out their platform due diligence. Although advisers already have a responsibility here under the FCA’s Suitability of Advice rules, the Consumer Duty adds a new lens.
And of the four Consumer Duty outcomes, firms will struggle to meet their obligations under Consumer Support and deliver an effective service to clients without their platform delivering.
Ultimately, adviser firms need to consider the parts of their due diligence which matter the most to help them achieve good outcomes for clients.
As I see it, no criteria is likely to be as important as a platform’s financial strength and a track record of investment in its service support.
Ability to offer robust service support for the long-term
The financial strength of a platform demonstrates its ability to not only adapt to changing market conditions and to unforeseen challenges, but how it can:
- commit to its development for the long-term
- respond quickly to tech issues when they arise.
These capabilities are vital as now more than ever, advisers need to be confident that its platform will provide the robustness of support to help them deliver for their clients, day in and day out.
The Consumer Duty places a responsibility on firms to deliver a suitable standard of service to clients and highlights how they must evidence how their service is of the standard the regulator expects – and advisers are almost entirely dependent on their platform partner for this.
The need for firms to consider their reliance on partners to deliver good outcomes has already been called out by the FCA in its multi-firm review at the start of the year. The review underlined the importance of ‘working with other firms’ to share information, and to have confidence in chosen providers to help meet the needs of consumers.
Given that advisers are entrusting their clients’ savings for the long term with a platform, in the current environment they need to be considering:
- whether their platform is focused on delivering good service
- its track record of service and its commitment to continuous development
- its ability to resolve issues efficiently and effectively.
Most importantly, firms need to carefully look at whether the platform has the financial strength, backed by industry analysis, to support these commitments. As having the ability to deliver an effective and reliable service for the long term requires deep investment in people and in technology. And a platform provider with the financial strength that has been rated by industry experts is evidence that this level of investment can be made.
Providing good service is dependent on key factors
In its recent White Paper, ‘Answering the call?’, adviser industry consultants the lang cat highlights good service is essentially about the technology, the people and reliability. Other core factors to be added to the list are the speed to answer calls, the face-to-face support available and how vulnerable customers are treated so that they’re not disadvantaged.
For any adviser firm, focusing on a platform’s service levels as part of the due diligence process is critical. But it’s also worth adding that when looking at their reliance on providers to help deliver good outcomes, firms should be revisiting the level of service they provide to their partners and most importantly, to their clients.
Financial strength is the key
In conclusion, a platform’s robustness of service support and its financial strength is important to adviser firms. Under the rules, advisers need to be aware not only of their ability to deliver a suitable level of service to achieve good client outcomes, but how they’re reliant on partners for this. Firms, therefore, need to have the absolute confidence that their platform partner’s service support has a long track record and will be maintained and developed over the long-term.
This is the area of platform due diligence advisers need to be focusing on and a platform’s financial strength is the key.
Take a look at our Consumer Duty support hub to access our full range of insights and help
Take a look at our support for vulnerable customers
The value of investments can go down as well as up and your clients could get back less than they paid in
The views expressed in this blog should not be regarded as financial advice.