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Happy Friday everyone! Alanis here (one of the Verve compliance experts); Cathi is off enjoying some sun (not jealous at all), so I’ve been let loose with Eclipse this week. Those that know me, know I work in the compliance department and there’s really no better topic than compliance for a Friday afternoon; I’m sure you’ll all agree.... Before you all click off, I promise it’s interesting and relevant!

One of the conversations I’ve been having a lot recently with advisers is around the new Consumer Duty cross-cutting rule: ‘avoid causing foreseeable harm’. The last year has been focused on justifying your advice fees and defining your service offering, but what about those cross-cutting rules? I have been asking firms what ‘foreseeable harm’ means to them…

Don’t cheat, have a think about what this means to you before reading further (can you tell I work in compliance?).

Most firms immediately talk about vulnerable clients and what they are doing to protect them, and it’s a great starting point, potentially the greatest harm exists for clients with characteristics of vulnerability. But what about everyone else?

PIPSY anyone? Protection, income protection, pensions, savings and investments?

Avoiding causing foreseeable harm is as much about what you’re not doing as what you are doing for clients. We’ve spoken about retirement income being a key foreseeable harm, but what about protection needs? Protection falls first on the priorities of financial planning, so what if you highlight a shortfall to a client, are they fully informed when deciding to proceed or not with the advice given? Inheritance Tax Liabilities for example, how often do we see ‘we considered a whole of life policy, however, you do not want the monthly expenditure’, ‘we discussed your IHT liability, but this is something you don’t want to consider’. How many of you are providing clients with quotes, so when they say they don’t want to take on a monthly payment, they’re fully aware of the monthly costs of a policy, and how affordable this would be for them? A protection shortfall is a foreseeable harm, one you can clearly address.

Consumer Duty has encouraged firms to consider their service offering and how much they are meeting the needs of their target clients. Firms have highlighted gaps in their businesses and are closing these, often through training, role plays, and file checks looking specifically at that foreseeable harm.

With the FCA becoming a data led regulator and the increasing prevalence of information requests, being able to have a robust process in place for advisers within a firm to follow is key, as Senior Managers (particularly the compliance oversight) need to be more confident than ever that they can evidence how they are acting to avoid causing foreseeable harm, and how you are monitoring this on an ongoing basis (did you know that we have a snazzy piece of tech to help you do this?! I've linked it for you to take a look!).

Are you confident that your board reports, back-office information and the rest of the kitchen sink (I’m sure we’ve all seen the 84-page retirement income survey) would sufficiently evidence that you have a process in place for assessing this? Funnily enough, we have a MASTER coming up on the compliance oversight role too.  And speaking of MASTERs, did you know we’re hosting one of our world-class MASTER's in partnership with Foresight? A session looking at EIS, VCT, BR and how they can fit within your product offering. A nice end-of-year CPD boost! I'll link our upcoming events below for you too.

For the final link, I've added an interesting FT article around the same subject, to give even more context to this particular rule and where it may catch you out. If you have any questions about anything I've said today, or on the 'Duty' in general, please don't hesitate to give me a shout. 

And that’s me, it wouldn’t be Eclipse without a drink’s recommendation, I’m usually a Stella Artois drinker but since it's fireworks night on Sunday, a Baileys hot chocolate feels necessary this weekend.

Look: at our snazzy new piece of tech and sign yourself up for a free 7 day trial.

Join: our next MASTER sessions!

Read: the FT article here!