Royal London, the UK’s largest life, pensions and investment mutual, along with research partner, the lang cat, has found 37% of adviser firms have changed their fee structure as a result of completing the Consumer Duty fair value exercise. 21% of those asked found the changes needed were difficult and a lot of work was needed to comply, with a small number (3%) still to make the required changes.
Encouragingly, the research shows the Consumer Duty overall to be a positive change with over two thirds (67%) of the respondents agreeing the work needed to carry out the fair value assessments has been worthwhile.
The research has also highlighted that only 20% of adviser firms have issued updates to their clients about the Consumer Duty, and more specifically on fair value, 39% of adviser firms haven’t mentioned it at all, and 41% have only mentioned it when prompted by their clients.
Jamie Jenkins, Director of Policy at Royal London, said “The Consumer Duty has prompted a great deal of activity from all areas of the financial services industry and, while this may have initially seemed onerous, it’s clear that it is making a difference to how firms operate in the interests of clients and customers. Financial advisers are closer to their clients than anyone else in the value chain, so they are very well placed to understand the changes needed to deliver good outcomes.”
Mike Barrett, Consulting Director at the lang cat, added: “If you believed the noise, you might conclude that advisers believe Consumer Duty is a waste of time. Reassuringly, our research shows a more positive sentiment, which, I think, reflects the advice sector’s transformation from an industry into a profession.
“Yes, there has been work to do to facilitate this transformation, however the intentions for Consumer Duty are hard to argue against. If the regulator can evidence proactive supervision, driving change and taking enforcement action where necessary, as well as helping advice firms understand best practice, we believe this positive sentiment can improve further.”
