Advisers will look to platform providers for Consumer Duty support

by | Jun 22, 2022

Share this article

  • Nearly half (46%) of advisers aware of Consumer Duty rules will turn to platform providers for implementation support.
  • Advisers expect Consumer Duty compliance will require procedural changes (54%), extra resource (46%) and pose new costs (44%).
  • Meanwhile, advisers highlight knowledge barrier when it comes to the wider adoption of new regulation.

Nearly half of financial advisers aware of the FCA’s Consumer Duty regulations will seek implementation support from their platform provider if the rules are introduced, according to new research from abrdn.

 Seven in ten (73%) advisers are aware of the proposed regulations, with a quarter (25%) entirely unaware. Awareness is highest among those working in networked firms (75%), and lowest among those at firms with restricted direct authorisation (69%).

 If the rules – a final version of which are expected to be published by the FCA in July – were implemented as proposed, nearly half (46%) of advisers with an understanding of the requirements would turn to their platform provider for support with implementing the new rules. 

Just over two in five (44%) would rely on internal resources, while a further two in five (39%) would engage their external compliance provider.

 

When asked about the anticipated impact of Consumer Duty on their firms’ own operations, more than half (54%) of advisers expected their organisation would need to make procedural changes to comply. 

Just under half (46%) expected their firms would need to take on additional resource to comply – with those working in directly authorised businesses (50%) most likely to expect the need for further hiring.

Meanwhile, just over two fifths (44%) expected to see overhead costs increase. Those in networked businesses least expected to see a financial impact (35%), rising to more than half (51%) of advisers in directly authorised firms.  

 

Alastair Black, Head of Industry Change, abrdn, said: “Consumer Duty will be a big step change for advisers when it comes into force next year. It’s clear that the majority of are already reviewing what it means for their business, and are anticipating the need to change processes, procedures, and even hire, to ensure they are aligned.

“At its core, Consumer Duty is about good governance, which will touch on all parts of firms’ operations. With this in mind, it’s encouraging to see that advisers will be turning to a range of sources to aid their compliance efforts, including their third-party partners.

“Consumer Duty is essentially advocating good customer outcomes which is already at the heart of everything an advice firm does. So, while it’s encouraging to see firms considering its implications, the change may not be as big as some fear.

 

“However, there are a number of important steps all firms will need to take. For some this will be similar to implementing the SMCR (Senior Managers and Certification Regime) where there was no clear documentation and rationale to follow. For example, there are some elements that may be new for some advice firms, like documenting how they determine their advice service and charge is good value for money. 

“The insight, and support, of suppliers – whether it’s platform technology, or otherwise – that understand the regulations, and what it might mean for individual businesses, will be hugely valuable to delivering the outcomes the new regulation aims to achieve.” 

As the publication of the final Consumer Duty rules approaches, abrdn’s research also explored where firms saw challenges when it came to the adoption of new regulation in general. 

 

Advisers most frequently pointed to a lack of understanding of new requirements as their biggest hurdle (26%), with a quarter (25%) citing the financial pressure of increased overhead costs.

A further quarter (25%) said they lacked capacity within their business to support new regulation’s administrative burden, while just over one in five (23%) said they struggled with implementation deadlines being too tight.  

Alastair Black added: “Regulation needs to evolve to ensure that advisers, and their clients, remains supported and protected. But we know that adapting – particularly to major changes – takes significant amounts of time and resource. 

 

“Working with the right third-party partners, with right experience and expertise, can help advisers move at pace to tackle the knowledge barrier, reduce the cost of implementation and ease capacity pressures – ultimately enabling advisers to spend more of their valuable time on doing more for their clients.”

Share this article

Related articles

Winners of the Protection Guru Awards 2022 are announced

Winners of the Protection Guru Awards 2022 are announced

Protection Guru, has today announced the winners of Protection Guru Awards 2022. In this, their second year, the awards have been established to recognise the leading lights of the protection industry. The team at IFA Magazine extends our congratulations to all this...

Trending articles

IFA Talk logo

IFA Talk is our flagship podcast, designed to fit perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast - listen to the latest episode