Consumer Duty One Year On: What Wealth Advisers Must Do Now

Where things stand

The Consumer Duty came into full force on 31 July 2023 for existing products and services. Over a year later, the FCA has made clear that it expects firms to move beyond initial compliance and embed the Duty into their day-to-day operations.

For wealth advisers, particularly those serving high net worth clients, this is not a box-ticking exercise. The Duty requires ongoing evidence that you are delivering good outcomes, not just a one-off assessment completed for the regulator.

The four outcomes that matter

Products and services

The FCA expects firms to ensure that their products and services are designed to meet the needs of the target market. For wealth advisers, this means reviewing whether your investment proposition genuinely serves your client base.

Key questions to ask:

• Are model portfolios appropriate for clients with complex needs?
• Do clients have access to the full range of asset classes they need?
• Is there a clear rationale for every product in your recommended suite?

Price and value

This is where many wealth firms face the most scrutiny. The FCA wants evidence that fees charged are reasonable relative to the service provided. That means documenting:

• What clients pay across all layers (advice fees, platform charges, fund costs, custody fees)
• What clients receive in return (frequency of reviews, depth of financial planning, quality of reporting)
• How this compares to reasonable alternatives available in the market

Firms with opaque fee structures, which is one of the key reasons HNW clients are leaving larger firms, are particularly exposed.

Consumer understanding

Clients must understand what they are buying and what it costs. For wealth advisers, this means reviewing your client communications:

• Are suitability reports clear and jargon-free?
• Do clients understand the risks and costs of their investments?
• Are ongoing communications accessible and relevant?

Consumer support

The Duty requires firms to provide support that meets the needs of their clients, including vulnerable clients. This extends beyond complaints handling to encompass the entire client journey.

What the FCA is looking for now

The regulator has signalled several priority areas for its ongoing supervisory work:

1. Evidence of board and senior management engagement. Consumer Duty should feature in governance discussions, not just compliance reports.

2. Outcomes data. Firms need to demonstrate, with data, that clients are receiving good outcomes. Subjective assessments are not sufficient.

3. Fair value assessments. The FCA expects these to be detailed, evidence-based, and regularly updated. A templated assessment from 2023 will not pass muster in 2026.

4. Complaints and feedback analysis. Patterns in client complaints or feedback should be actively used to improve the proposition.

Practical steps for wealth advisers

Conduct an honest fee review

Map every cost your clients bear, from initial advice charges to ongoing platform fees. Compare this against the service you actually deliver. If there is a gap, close it before the regulator asks you to.

Upgrade your reporting

Clients should receive clear, regular reports that show investment performance, costs incurred, and progress against their financial goals. Choosing the right platform can make this significantly easier.

Document your investment rationale

Every investment decision should have a clear, documented rationale that links back to the client’s objectives and risk profile. This is not new, but the Consumer Duty raises the bar for what the FCA considers adequate documentation.

Train your team

Consumer Duty compliance is not the sole responsibility of your compliance officer. Everyone who interacts with clients needs to understand the principles and how they apply to their role.

The competitive angle

Firms that embrace Consumer Duty as a genuine standard of service, rather than a regulatory burden, will find it easier to attract HNW clients who value transparency and professionalism.

In a market where trust is the primary differentiator, being able to demonstrate clear compliance with the highest regulatory standards is a competitive advantage, not just a cost.

The FCA’s Consumer Duty guidance ↗ provides the framework. How you implement it will define whether your practice leads or follows.