By Neil Herbert, Director of HRComply
In this article – and following our joint survey with IFA magazine of Advisers’ attitudes to the increasing burden of compliance – we will consider the key challenges, the best responses, and why online automation can make it all so much easier.
It is certainly nearly upon us – Consumer Duty that is – and there can be barely anyone in the Advice industry that isn’t at least aware of it and the possible significance of its impact. What is striking is that that awareness is not matched amongst the consumer – or potential consumer – population. There has been far less coverage of the new regime and its impact/benefit in the broader or client-targeted media. I would imagine that relatively few consumers would have much understanding of the brave new world of Consumer Duty and yet it is designed to benefit them. Of course – one could argue that that’s way it should be and that the Consumer should expect the best outcomes and value from the industry without having to worry about compliance regulations.
As it draws closer though – one thing is clear. Many firms are struggling to deliver – or even define – what is an adequate response and strategy. Consumer duty is definitely presenting a challenge on resources and company capacity for many firms. Others seem to take the view that they already have their customers’ best interests at the heart of everything they do and that should mean they are fine. Still others are discovering that they already aren’t delivering on other aspects of regulation in which the quality of their product delivery – the suitability of advice, the competence and conduct of their advisers – is properly audited and mitigated when it falls short. They will be worrying about the further challenges that Consumer Duty will present. Hopefully they will use this challenge as an opportunity.
Consultants everywhere will be urging advice firms not to adopt tick box – go through the motions – solutions and to lead from the top with culture-based game changing boldness. But the truth is there is no one size fits all when it comes to what is required and what level or type of processes are put in place. For one thing proportionality and cost of your response has to be taken into account.
Compliance fatigue is another. In a recent survey that HRComply conducted with IFA magazine we found that 70% of Advice professionals worry that they will be found wanting when it comes to compliance – their own and their business’s. And that nearly 40% responded that the ongoing and growing burden of compliance has made them consider exiting the industry altogether.
In delivering – as we do – automated solutions to assessment and benchmarking of quality and compliance – we always aim for simplicity and affordability as one of our key objectives. Simplicity because if its not simple Advisers will be reluctant to use it and they won’t engage. Affordability requires no further explanation.
One of the first questions you should ask – after that is that you have: defined your data sources; your benchmarks; what good looks like; your processes and assessment regime etc etc – is what are the barriers to engagement and completion. Yes – there is general fatigue at yet another tranche of regulatory processes to complete – but make them relevant and easy to use and you will be well on the way.
Many smaller firms desperately need automation – not just of the Consumer Duty compliance/assessment process – but of other personal compliance and certification processes (RDR or SMCR for example). But they certainly should consider the proportionality of their strategy, processes and the system they invest in. In other words, don’t build or buy a sledgehammer to crack a nut.
I recently read an article about defining ‘value’ for customers and how firms should be looking at how clients would be faring- or what they would have done – if they hadn’t purchased the firm’s advice. And in that gap lies the benefit or not of that firm’s delivery. Easy to write – really not at all easy to define or deliver. In my view firms should be wary of investing time and resources in chasing after the intangible. The truth is there isn’t a clear definition of benefit or value – so stick to simple quantifiable benchmarks and common-sense processes that can determine satisfactory outcomes and real benefit to clients.
If you haven’t done so already you should be considering the following key questions when approaching Consumer Duty compliance:
- Is the principle of Consumer Duty embedded fully into your organisation and flowing top down?
- Are your staff fully trained and understanding of the principles of Consumer Duty?
- What is the broad strategy you are taking? Based on affordability and proportionality
- What will be your data sources for assessment and tracking
- What does good look like for your business as well as your clients? What will be your benchmarks and assessment processes
- How are you thinking about implementing Consumer Duty – will you utilise an automated system?
- How will you determine the cost/benefit to the business of your chosen strategy and process
I truly believe that if a firm is delivering well on the elements of say – RDR – or they have a fully automated properly benchmarked SMCR certification system in place then delivering on Consumer Duty should be a piece of cake. Yes – the data benchmarks and assessment processes need to be more customer-centric – but the general principles, the methods and processes remain very similar. If you have engaged staff already in clear easy to use assessment processes on the path to Compliance then delivering on Consumer Duty Compliance shouldn’t be too much further a stretch.
If you want to discover how easy and affordable automating your People Compliance can be – contact me neil.herbert@hrcomply.co.uk to arrange a demo of our easy-to-use online platform.
To visit the HRComply website, please click here
About HRComply
HRComply was founded in 2009, capitalising on many years spent assisting financial institutions in delivering T&C, Conduct and Performance solutions to meet FCA requirements. As new regulatory regimes have been introduced, HRComply has worked with its clients to develop the software to its current four-solution structure.
Our focus is delivering products, content, processes and support that are individually tailored to our customers’ needs. All of our development work has been conducted in collaboration with our clients, designed to meet their business requirements and address their regulatory risks.
HRComply has a strong and dynamic Senior Management and delivery team. Between them they have many decades of City-based HR, Compliance and T&C experience delivering software system solutions to meet regulatory and client needs.
