Consumer Duty and Client Understanding — A practical view through a client preference lens
What this page is about
Consumer Duty can be interpreted in different ways in practice.
This page sets out a practical view through a client preference lens — focusing on how understanding what matters to the client supports good outcomes.
For most advisers, the challenge is not adding more questions to their processes. It is making sure that:
- client objectives are properly understood
- relevant preferences are identified, where they exist
- recommendations reflect what matters to the individual
This is not about changing suitability rules. It is about how they are applied in practice.
What the Consumer Duty is asking
Firms are expected to:
- act in good faith
- avoid foreseeable harm
- support clients in pursuing their financial objectives
Those objectives are defined by the client. For many, they are purely financial. For others, they may also include:
- personal values
- sustainability preferences
- ethical views
This does not mean every client must have objectives wider than being purely financially driven — it just means that where they exist, they should not be overlooked. It is about knowing the client fully.
According to COBS, advisers must gather information on:
- knowledge and experience
- financial situation
- investment objectives
And, in practice, objectives have historically been captured as purpose, time horizon and financial goals. This is appropriate.
Consumer Duty builds on this foundation, with a greater focus on outcomes, understanding, and foreseeable harm.
→Have I understood the client well enough?
Where gaps can arise
Most advice processes record what has been discussed with investment clients.
If something is not explored, it is unlikely to appear in the file.
This can include:
- personal values
- sustainability preferences
- ethical exclusions
So a recommendation can potentially be technically suitable and fully documented, but still not reflect what matters most to the client.
In many cases, clients may not be aware that their personal values could be integrated into their investment decisions.
Sustainability and personal preferences
Some clients want their investments to reflect environmental or social considerations. Others do not.
The practical position is simple: →If it matters to the client, it should be identified and considered.
Not as a separate exercise — but as part of understanding the client.
A proportionate approach
Consumer Duty does not mean asking everything. It means asking enough.
- Some clients will have no additional preferences
- Some will want a simple conversation
- Others may want more detail
The level of discussion should reflect the client.
→Was enough done to understand what matters to this client?
What this looks like in practice
This is not about a new process. It is about making space for the right conversation.
In practice:
- give clients the opportunity to express preferences
- avoid assumptions
- record what is discussed
- reflect it where it affects the outcome
If preferences are not relevant, note this on file. If they are, include them in the suitability rationale. This is where structured tools and consistent approaches can support advisers in practice.
Supporting consistent conversations in practice
More firms are introducing simple structures to support this.
This helps to:
- reduce missed areas
- support consistency
- improve clarity for clients
Whether clients have specific or values-related preferences or not, it is important that advisers have the conversation with all investment clients and that the conversation is recorded appropriately on file and referenced in the suitability letter.
The Accord Initiative Preference Toolkit supports this approach with:
- clear, client-friendly documents to inform choice and support conversations
- flexible use across advice styles
- support for proportionate conversations
Having a simple, structured approach can also support firms in meeting Consumer Duty expectations more broadly — helping ensure information is captured consistently, and enabling firms to assess, monitor and respond to client outcomes over time.
The key risk to be aware of
A file can look complete without showing a full understanding.
If objectives are recorded narrowly:
- the recommendation may meet technical requirements
- but still miss part of the client’s intent
This may create a risk of:
- poorer outcomes
- misunderstandings
- avoidable harm
In practice, this comes down to shifting focus from processes that ask “Have I captured everything?” to “Have I understood this client properly?”
Client Preference Ready (CPR)
The Client Preference Ready (CPR) badge recognises firms that:
- support clear client conversations
- identify relevant preferences
- reflect them appropriately in advice
It is about doing what matters — clearly and consistently.
Final thought
Consumer Duty reinforces a simple principle: Good advice starts with understanding the client.
For some, that may be entirely financial. For others, it may include sustainability, ethics or personal values. To deliver good outcomes and avoid foreseeable harm, these should be identified and reflected where relevant.
Further support
For practical tools, see:
💡If you’ve got questions, Accord Consulting offer practical and strategic support for advice firms, DFMs and fund groups - please contact us ✉️elly@inaccord.co.uk or ✉️lee@inaccord.co.uk