Suman Rao, Managing Director for UK and Ireland at Avaloq shares her thoughts on the impact of Consumer Duty two years following its implementation.
“Two years on from the 2023 implementation of the FCA’s Consumer Duty, it’s impact on the UK wealth management sector remains undeniable. The Duty has driven a positive cultural shift across the industry, fundamentally reshaping how firms approach client outcomes, driving a renewed focus on transparency, accountability and fair value.
That said, the journey hasn’t been without its challenges. For many firms, compliance has been time-consuming and complex, requiring significant investment in systems, training and oversight. One of the most persistent hurdles has been evidencing good outcomes, with many firms having to put systems in place to demonstrate that they are consistently delivering good value for clients. Strong data management has therefore become essential. Firms must now track more client information than ever to assess whether products offer fair value.
Another key consideration is the need to recognise and respond to client vulnerability. To address this requirement, many firms have added plug-in vulnerability detection tools and other systems to monitor changes and tailor services accordingly. However, more systems can result in data fragmentation. Consolidating this data for the purpose of Management Information (MI) reports is easier for firms with effective data warehousing, but it is a major challenge for those relying on manual processing. This highlights the long-term strategic advantage of automation.
Looking ahead, it’s important that firms recognise that Consumer Duty is not a one-time exercise. The FCA expects firms to show continuous improvement in the delivery of good client outcomes. Technology will be central to this and wealth managers who invest now in smart, scalable systems will be far better placed to meet evolving expectations.”
