According to research carried out by mutual insurer, Royal London, eight in 10 (80%) advisers feel they are well prepared for the introduction of new standards of customer care, as part of the FCA’s Consumer Duty Guidance. Of those, half (53%) believe they will only need to make small changes to their business to comply.
The new rules and guidance are due to be published by 31 July 2022, with all firms needing to be fully compliant by April 2023.
The legislation will deliver a ‘fundamental shift’ in the approach to regulation by raising the bar on delivering good outcomes for customers. It is perhaps surprising then that a quarter of advisers (27%) aren’t considering making any changes. At the other end of the scale, a very small group of advisers (2%) anticipate making significant levels of change.
Of more concern though, is that one in five advisers (19%) say they haven’t heard of the new Consumer Duty and therefore won’t have considered the level of change they may or may not need to make.
Meeting the deadline
The scale and breadth of the regulator’s ambition may mean some advisers face a significant undertaking. Encouragingly though, seven in 10 (70%) advisers embracing the regulation and making changes to adapt are confident they’ll meet the deadline. Only 8% harbour any concerns about the timings.
Business areas advisers expect to review or change
Advisers said that ‘processes that help to shape client recommendations’ (33%) was the business area they were most likely to review or change in light of the Consumer Duty legislation. That was followed by ‘adviser to client communications’ (31%) and ‘adviser to client service’ (29%).
Who advisers will turn to for support
When preparing for the implementation of the new Consumer Duty, around half of advisers (48%) said they would look to their network for help, closely followed by providers according to two fifths (42%) of advisers. A quarter (24%) said they’d look to the FCA for support, 4% the Government, while one in 10 (12%) advisers said they were confident they could manage themselves without help.
Jamie Jenkins, director of policy at Royal London, said:
“Advisers are undoubtedly well placed to understand customer outcomes, and it’s reassuring to see that most advisers expect their business to comply with the Duty on time.
“What is of concern is the number of advisers who are either unaware of the new rules coming into force, have yet to read the consultation paper or don’t believe it will add any value to consumer outcomes.
“It’s encouraging to see that many advice firms will turn to their network or provider for help, collaborating to deliver good outcomes for their clients.”