Consumer Duty to increase on product design

The Association of Investment Companies (AIC) has welcomed the increased emphasis the FCA’s latest policy statement  “A new Consumer Duty” (PS22/9) places on product design to deliver better outcomes for investors.

Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “We welcome the increased responsibility the new Consumer Duty will place on firms to ensure the right products and services are being offered to customers. When firms design and review their products they should take into consideration the outcomes that they are trying to deliver for consumers. 

“Investment companies have proven benefits which lead to excellent long-term outcomes for investors. We hope the new Consumer Duty will encourage more asset managers to consider launching investment companies. We also believe more advisers need to consider investment companies and platforms should give them appropriate prominence when presenting portfolio suggestions to their customers.”

Investment companies have strong long-term performance, having outperformed open-ended funds in 12 out of 16 sectors over ten years. They have unique income benefits with 17 dividend hero investment companies having increased their dividends for more than 20 years. Investment companies also provide permanent capital which makes them an ideal structure for alternative assets such as property or infrastructure.

Last year purchases of investment companies on adviser platforms amounted to £1.3 billion. This was an increase of 23% on 2020. However, only 15% of adviser firms use investment companies, according to data from ISS Financial Clarity.

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