Advisers to rely on platform providers for Consumer Duty support

22 June 2022

Our latest press release shares our recent research findings on how advisers will rely on platform providers for Consumer Duty support.

Nearly half (46%) of advisers, who use platforms, are aware of Consumer Duty rules will turn to platform providers for compliance support
Advisers expect Consumer Duty compliance will require procedural changes (54%), extra resource (46%) and pose new costs (44%)
Meanwhile, advisers highlight knowledge barrier when it comes to the wider adoption of new regulation

Nearly half of financial advisers, who use platforms, are aware of the FCA’s Consumer Duty regulations will seek compliance support from their platform partner if the rules are introduced, according to new research from abrdn.

Seven in ten (73%) advisers are aware of the proposed regulations, with a quarter (25%) entirely unaware. Awareness is highest among those working in networked firms (75%), and lowest among those at firms with restricted direct authorisation (69%).

If the rules – a final version of which are expected to be published by the FCA in July – were implemented as proposed, nearly half (46%) of advisers with an understanding of the requirements would turn to their platform partner for support with compliance.

Just over two in five (44%) would rely on internal resources, while a further two in five (39%) would engage their external compliance provider.

When asked about the anticipated impact of Consumer Duty on their firms’ own operations, more than half (54%) of advisers expected their organisation would need to make procedural changes to comply.

Just under half (46%) expected their firms would need to take on additional resource to comply – with those working in directly authorised businesses (50%) most likely to expect the need for further hiring.

Meanwhile, just over two fifths (44%) expected to see overhead costs increase. Those in networked businesses least expected to see a financial impact (35%), rising to more than half (51%) of advisers in directly authorised firms.

Alastair Black, Head of Industry Change, abrdn, said: “Consumer Duty will be a big step change for advisers when it comes into force next year. It’s clear that the majority of advisers are already reviewing what it means for their business, and are anticipating the need to change processes, procedures, and even hire, to ensure they are aligned.

“At its core, Consumer Duty is about good governance, which will touch on all parts of firms’ operations. With this in mind, it’s encouraging to see that advisers will be turning to a range of sources to aid their compliance efforts, including their third-party partners.

“The insight, and support, of suppliers – whether its platform technology, or otherwise – that understand the regulations, and what it might mean for individual businesses, will be hugely valuable to delivering the outcomes the new regulation aims to achieve.”

As the publication of the final Consumer Duty rules approaches, abrdn’s research also explored where firms saw challenges when it came to the adoption of new regulation in general.

Advisers most frequently pointed to a lack of understanding of new requirements as their biggest hurdle (26%), with a quarter (25%) citing the financial pressure of increased overhead costs.

A further quarter (25%) said they lacked capacity within their business to support new regulation’s administrative burden, while just over one in five (23%) said they struggled with implementation deadlines being too tight.

Alastair Black added: “Regulation needs to evolve to ensure that advisers, and their clients, remains supported and protected. But we know that adapting – particularly to major changes – takes significant amounts of time and resource.

“Working with the right third party partners, with right experience and expertise, can help advisers move at pace to tackle the knowledge barrier, reduce the cost of implementation and ease capacity pressures – ultimately enabling advisers to spend more of their valuable time on doing more for their clients.”

The Consumer Duty’s final policy statement will be published by 31 July 2022. For more information on the second consultation, visit here.

Read Alastair Black’s blogs on the new consumer duty: