Trade association PIMFA has published updated guidance on how advice firms and discretionary investment managers can work together.
In October 2021, PIMFA joined forces with threesixty services and DFM Connect to create a guide on how the arrangements between advice firms and discretionary managers should be structured in line with FCA rules on ‘Agent as Client’ and ‘Reliance on Others.’ It explored the pros and cons and features of each model, allowing firms to make informed decisions about which is likely to work best for their business and their clients in any given scenario.
This guide has now been updated to reflect the Consumer Duty, which aims to set higher and clearer standards of consumer protection across financial services and put customers first. To meet the Consumer Duty requirements, all firms need to show how they are putting their clients at the heart of their business, offering products and services that are fit for purpose.
While the Consumer Duty is targeted at firms dealing with retail clients, it also affects firms where there is no direct relationship between the firm and the underlying retail client but where the firm is providing products and services into the retail client space.
Liz Field, chief executive of PIMFA, said: “With the Consumer Duty coming into effect in only a few short months, now is the right time for advisers and discretionary firms to consider how their relationships with each other and the way that responsibilities are divided between them work in the context of the Duty.
“I am pleased that PIMFA and DFM Connect have been able to work with threesixty services to provide guidance that will help advisers and discretionary investment managers to meet the Consumer Duty’s key objective, namely to ensure good outcomes for their clients.”
Vanessa Johnson, head of compliance strategy at threesixty services, added: “How arrangements between adviser firms and discretionary fund managers are structured remains a constant source of discussion. The Consumer Duty does not change the essence of how the arrangements are structured but it requires all firms to review their products and services and ensure that they meet the regulator requirements.
“The key message of this updated guide has not changed. At the heart of these arrangements lies the client’s best interests. It is therefore important each party understands the structure of the arrangements they set up and ensure their propositions meet the Consumer Duty outcomes.”
