The UK FCA has introduced the Consumer Duty to improve the standard of care provided to retail customers, after continuing to find evidence that they:
typically face a weak bargaining position in their relationship with firms;
are more susceptible to cognitive and behavioural biases;
may lack experience or expertise in relation to products offered; and
are subject to information asymmetries (between themselves and firms).
The Consumer Duty is being implemented through the introduction of an additional twelfth Principle for Business:
A firm must act to deliver good outcomes for retail customers.
This involves three new cross-cutting rules, in which firms must:
act in good faith towards retail customers
avoid foreseeable harm to retail customers
enable and support retail customers to pursue their financial objectives.
The Consumer Duty also introduces four consumer outcomes, focused on:
Products and services – all products and services for retail customers are fit for purpose and are designed to meet their needs
Price and value – all products and services provide fair value to retail customers
Consumer understanding – communications to consumers enable them to make informed decisions about financial products and services in a timely manner throughout the consumer journey
Consumer support – ensure that consumers are provided with a level of support that meets their needs
The Duty comes into force for all new and existing products and services open to retail customers on 31 July 2023.
Ahead of the July 2023 deadline, GAM has assessed its existing processes and is making enhancements to ensure the needs, characteristics and objectives of retail customers is at the forefront of everything we do – including those with characteristics of vulnerability – and how they behave, at every stage of the consumer journey.
Accordingly, GAM has appointed Charles Naylor as the Consumer Duty Board Champion for GAM Sterling Management Limited and Gary Withers as the Consumer Duty Board Champion for GAM London Limited and GAM International Management Limited.
This will ensure that the standard of care provided to retail customers is considered in all relevant discussions in Board meetings and that the Board is challenged on how GAM is focusing on customer outcomes and embedding Consumer Duty within GAM’s culture.
Information for UK distributors:
The Consumer Duty will be considered applicable regulation under any agreement that GAM may have with a UK Distributor when it comes into force on 31 July 2023.
GAM will ensure all the relevant fund information in relation to the Product and Services Outcome and the Price and Value Outcome are available to Distributors.
Information relating to the Product and Services Outcome
GAM shall share upon request any additional information regarding its funds and the fund approval process necessary to allow Distributors to comply with its obligations under the Products and Services Outcome, including information to enable it to consider the needs, characteristics and objectives of any retail customers in the target market with characteristics of vulnerability.
Information relating to the Price and Value Outcome