Keith Richards, CEO of the Consumer Duty Alliance, has revealed that he once signed off on a 75 page suitability report.
But he added that Consumer Duty holds the key to cutting these documents to as little as just two pages due to the outcomes-based nature of the regulation.
Simplifying communications
On the fourth day of Income Protection Action Week, Richards (pictured) maintained that improvements can be made in the way the protection sector communicates with its clients to simplify language.
“Take financial advice, I was on the board of a firm when we moved from reasons why letters which was a one page document, some may remember those, to the need to go to a suitability report that included more of the soft facts, not just the hard facts,” Richards explained.
“But they then grew from starting their life as six pages. I remember signing off on a 75 page suitability report knowing full well that it would add no value.”
Richard added that his compliance team was convinced that is what the regulator expected his firm to do, so they complied.
Unwinding expectations
Though Richards said that he is now hearing that the Financial Conduct Authority now wants these sorts of things to be unwound.
“The regulator didn’t tell us to do those 75 pages by the way, we came up with that ourselves,” he continued.
“We’ve had 75, 65. Some will have their own tales of where they know that their clients don’t read these reports, so they’re really not delivering against the proof of client understanding confidence outcome.
“But maybe unwinding to a two page suitability report is exactly where we go, because outcome based regulation is going to allow us to do that.”
