Embracing the Consumer Duty: Effective Communication Strategies for Asset and Wealth Management firms
The Financial Conduct Authority (FCA) is introducing a new Consumer Duty principle to ensure firms act to deliver good outcomes for retail clients. This will replace existing FCA Principles 6 and 7, and aims to improve the way companies communicate with their customers. In this article, we will explore the communication considerations Asset and Wealth Management firms should take into account and offer practical suggestions to ensure compliance.
Key Components of the Consumer Duty
The FCA's Consumer Duty principle requires companies to:
- Support consumer understanding by ensuring that their communications meet the information needs of retail customers.
- Ensure communication is clear, fair, and not misleading.
- Tailor communications to take account of the characteristics of the customer, including vulnerability.
- Ensure that information is accurate, relevant, and provided on a timely basis.
- Check communications for customer understanding.
- Test, monitor, and adapt communications to support good outcomes for retail clients.
Communication Considerations and Strategies
Companies in the Asset and Wealth Management sectors should consider the following strategies to improve their communications and ensure compliance with the Consumer Duty:
- Consumer testing: Conduct consumer testing before releasing product literature and consider adopting a question-and-answer format, which the FCA found to improve customer understanding by 35%.
- Plain language: Collaborate with organizations like the Plain English Society to ensure documents are easy to understand.
- Multi-channel approach: Identify and leverage various communication channels, such as social media, websites, financial promotions, disclosure documentation, and suitability reports, to reach clients effectively.
- Training and competence: Implement a robust training and competence plan to ensure advising staff can effectively communicate complex information and answer client questions.
- Disclosure documents: Regularly review and test disclosure documents' effectiveness by asking staff and clients to explain the services they expect and the costs involved.
- Suitability reports: Embrace a concise, easy-to-understand report style using plain language, bullet points, tables, and avoiding jargon.
- Cover sheets: Consider adding cover sheets to documents that clearly set out key information upfront and signpost further details in the package.
The FCA expects increasingly high standards when it comes to communication from financial companies. By adopting the strategies mentioned above, firms can ensure they remain compliant with the new Consumer Duty principle and provide a more transparent, effective communication experience for their clients.
Paragon is well-positioned to assist these companies in achieving these goals. With expertise in compliance, communication, and client experience, Paragon can provide guidance and support to help firms navigate the new regulatory landscape, ensuring that their communications are clear, fair, and not misleading. By partnering with Paragon, companies can create effective and engaging customer journeys, fostering trust and delivering good outcomes for their clients.