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How can investment firms improve communications ahead of Consumer Duty requirements?

By: Adele Gray


The investment industry has long been criticised for its jargon and lack of simplified information directed at consumers, but with the Consumer Duty requirements soon coming into force, groups will need to double down on ensuring investors understand what is presented in their communications.

Put simply, the Financial Conduct Authority (FCA) new Consumer Duty requirements (which come into force on 31 July 2023, although boards only have until 31 October to agree implementation plans) have one overarching principle, for “firms to act to deliver good outcomes for retail clients”.

With this principle covering products and services, price and value, consumer understanding and consumer support, client communications are more important than ever.

Looking at consumer understanding in particular, the regulator wants firms to ensure their customers’ understanding by guaranteeing that their “communications meet the information needs of customers, are likely to be understood by customers intended to receive the communication, and equip them to make decisions that are effective, timely and properly informed”.

It wants communications to be tailored to consider the complexity of the product and even the communication channel being used, and where there is a one-to-one conversation ensure the client has opportunities to ask questions. Investment firms will also be required to evaluate and monitor their communications and adapt to continue to ensure “good understanding and good outcomes for customers.”

RiF research shows there is a huge room for improvement in these areas, but also outlines areas investment firms may want to focus on.

Our recent Retail Customer Interests survey asked respondents to highlight areas where their trust could be built.

1. First and foremost, information around fees and performance was flagged as a priority area for asset managers to work on. Three quarters of the respondents said ‘clear fees’ would help build their trust.

2. ‘Explanations of underperformance’ and ‘strategy updates where there is underperformance’ were also top requests.

3. Investors also want to see more guidance around ‘reduced fees’ and ‘performance-based fees.’

4. Almost half said they purely want to see ‘simplified information and jargon.’

5. Other ways asset managers can help were listed as, in order of priority:

  • improved information on asset manager websites
  • being able to speak directly to a person about a fund
  • Q&A sessions with the individual fund manager

6. Transparency in general was seen as a huge positive in terms of building investor trust – which is currently at low levels in general. Asset managers are ranked 7th most trustworthy out of 11 sectors within financial services.

Given the areas our respondents have suggested need work, it is unsurprising communications has been a key area of focus in the composition of Consumer Duty requirements.

RiF can help groups with consumer understanding in several ways:

  • We can test marketing communication pieces with our pool of retail investors and ensure suitability for all consumers.
  • We can look at the understanding of key documents, websites, factsheets, and communications and can provide consumer feedback, along with recommendations for enhancements.

For more information on how we can help you Consumer Duty please get in touch with Mick Hrabe or Richard Ley. You can also call us on +44 (20) 7104 2235.