Consumer Duty + ESG = good client outcomes. What’s Consumer Duty got to do with ESG, I hear you cry? More than you imagine.

The principle of informed choice is outlined in Cobs but Consumer Duty brings it front and centre for advisers.

The Duty moves the regulations on providing investment advice from ‘what you have to do’ to ‘show how you have done it’.

Get your data and processes sorted and you will be able to demonstrate how you have achieved good client outcomes. A good suitability letter is not, in itself, evidence of that.

Informed choice is all about empowering clients with the right level of knowledge to ensure their decisions are informed. It is a juggling act for advisers to know what the ‘right level of knowledge’ is. For example, a quick verbal explanation or two sentences on ESG isn’t enough and a 25-page PDF is probably far too much.

Consumer Duty places a requirement on firms to document how clients are making an informed choice. This is not about having an ESG question in a fact find (by the way, this is completely the wrong place for the question anyway). Firms must document how the client was made aware of ESG, what it is and what it means before they are asked if they would like to build it into their financial planning.

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