Advisers will look to platform providers for Consumer Duty support

• Nearly half (46%) of advisers aware of Consumer Duty rules will turn to platform providers for implementation 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 aware of the FCA’s Consumer Duty regulations will seek implementation support from their platform provider 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 provider for support with implementing the new rules.

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.

“Consumer Duty is essentially advocating good customer outcomes which is already at the heart of everything an advice firm does. So, while it’s encouraging to see firms considering its implications, the change may not be as big as some fear.

“However, there are a number of important steps all firms will need to take. For some this will be similar to implementing the SMCR (Senior Managers and Certification Regime) where there was no clear documentation and rationale to follow. For example, there are some elements that may be new for some advice firms, like documenting how they determine their advice service and charge is good value for money.

“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.”

 

ENDS

 

Media enquiries

For further information, contact:

Calum Anderson
E: Calum.Anderson@citypress.co.uk
T: 0131 460 7922

Patricia Corrigan
E: Patricia.Corrigan@abrdn.com
T: 0791 782 2874

 

 

Methodology

Survey of 424 UK-based adult financial advisers, conducted by Censuswide on behalf of abrdn in May 2022.

Notes to Editors

At abrdn, our purpose is to enable our clients to be better investors.

abrdn plc manages and administers £542 billion of assets for clients, and has over 1 million shareholders. (Figures as at 31 December 2021)

Our business is structured around three vectors – Investments, Adviser and Personal – focused on the changing needs of our clients.

For UK wealth managers and financial advisers, we provide technology, expertise and support to make it easy for them to run their businesses – and to deliver the outcomes their clients want.

We offer content and experiences that can be personalised to suit every type of business and client, giving advisers powerful data and insight to make better decisions.

We’re the number one adviser platform business in the UK for assets under administration and gross flows (Adviser AUA: £76 billion as at 31 December 2021).

We’re also the first UK adviser platform provider to receive and retain an ‘A’ rating from AKG for the financial strength of our platforms (AKG financial strength reports 2021).

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