It would be impossible to make a rule to fit every possible situation and client. As a result, it takes a principle‑based approach that stresses outcomes rather than means. It sets out a general principle and then encourages a culture in which brokers seek to achieve the outcomes using their own judgement of how best to deliver these outcomes to its customers. The approach therefore relies on firms to interpret broad principles. The FCA requirements are well summarised in its 11 Principles for Businesses, which can be reviewed here: https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html
We can take from those principles the main focus of the regulator’s expectations and can summarise a firm’s obligations to its customers as follows, in no order and not an exhaustive list:
- to act in the best interest of the customer.
- to look after customers’ assets responsibly.
- not to abuse customers’ trust in the firm.
- to deal with customers in an open and honest manner.
- when things go wrong, to investigate and put things right promptly if the firm was at fault.
- make sure that customers understand the products and services they have bought, and that products are suitable and appropriate for them.
- to make sure that customers understand the costs and charges of any products and services they buy.
- to deal with customers sympathetically when problems occur. This is not to say the customer is always in the right; firms are expected to reach fair decisions rather than always finding in the customer’s favour.
It is doubtful that anybody would argue that these principles do not represent the correct approach, both from a regulatory perspective and from the viewpoint of good business practice. This is not to say that brokers cannot make a reasonable profit from its dealings with the customer and the regulator fully accepts that this should be the case.
There is a lot for brokers to take in and keep on top of their regulatory duties. RWA are here to help with your regulatory matters and talk in a language that brokers will feel comfortable with and at ease. Please do not hesitate to contact RWA regarding your regulatory matters and please sign up for the RWA Gap analysis if you have not already, which can be done via the RWA website https://rwaconsultancy.com/