Are advisers prepared for Consumer Duty implementation?

Its introduction has become a pressing issue

Are advisers prepared for Consumer Duty implementation?

Over one in six (17%) advisers admitted that they are unprepared for the implementation of the Financial Conduct Authority’s Consumer Duty, while a vast majority, or 86%, recognised that they will need to make changes to their operations in anticipation of the new regulation.

Research from later life lending platform Air also revealed that 8% of advisers were unsure about how prepared they are, while 5% did not know what changes are being made to the Consumer Duty. Only 19% of advisers said they felt very prepared for the changes.

When asked how they expect the Consumer Duty to impact their operations and processes, nearly half of advisers (47%) believe they will need to change the way they document the advice they provide. The same proportion (47%) also said they would need to review the customer journey and make changes as appropriate.

Some 29% said they will better need to assess and document the fair value justification of their renumeration, while more than a quarter (26%) said they would need to redefine the metrics they use to measure whether a good customer outcome has been achieved.

Air noted that the introduction of the FCA’s Consumer Duty has become a pressing issue for advisers, especially given the relatively short turnaround required for its implementation.

“The FCA’s Consumer Duty is the largest shake up in regulation for years with far-reaching effects across all financial services firms,” Stuart Wilson (pictured), chairman of Air Club, commented. “It’s clear to see from our research today that these reforms will have a profound impact on advisers in the later life lending market, with 86% believing they will need to change how they operate but far fewer being prepared for this shift.” 

With organisations expected to have a board or senior manager approved Consumer Duty implementation plan in place for new and existing products and services that can be sold or renewed, Air is urging advisers to use their time wisely ahead of the July deadline.

“While there is no doubt many advisers already have some of the mechanisms and systems in place to prosper in this new world, they should not be complacent,” Wilson said. “Now is the time to review, road test your approach, and ensure that you understand the most current industry thinking on this fundamental change.”