7 Relationships between advisers and DIMs 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 and which they know represent fair value. The Consumer Duty applies to firms dealing with retail clients. However, it also captures 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. This is particularly relevant where advisers structure their arrangements with DIMs on the ‘agent as client’ basis. The Consumer Duty applies to firms manufacturing products and services (manufacturers) and firms distributing products and services manufactured by a third party (distributors). So, a DIM is deemed to be the manufacturer of the model portfolios that it makes available to advisers. The Consumer Duty applies to all products and services, for example discretionary management services. There are specific requirements for ‘co-manufacturers’ – for example: where an adviser firm and DIM collaborate to ‘manufacture’ a specific product or service. Under the Consumer Duty, ‘a firm would be considered a co-manufacturer where they can determine or materially influence the manufacture of a product or service. This would include a firm that can determine the essential features and main elements of a product or service, including its target market.’* We have published a separate guide for manufacturers, comanufacturers and distributors, which is available from the authors. Each party in a distribution chain – adviser firm, DIM, platform - needs to assess how the Consumer Duty applies to them depending on their role and business model. * FG22/5: Final non-Handbook Guidance for firms on the Consumer Duty. (Para 6.10). Chapter one - Relationships between advisers and DIMs
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