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, according to new research from Air.
The platform for later life lending professionals found that 86% of advisers anticipate that they will need to make changes to their operations as a result of the Consumer Duty.
However, 17% of advisers said they were unprepared for the upcoming regulatory changes, while a further 8% were, worryingly, unsure about how prepared they were or not. Meanwhile, 5% of advisers don’t 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, while 29% said they will better need to assess and document the fair value justification of their renumeration. 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.
With organisations expected to have a board or senior manager approved Consumer Duty implementation plan in place for 31 October 2022 for delivery by 31 July 2023 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.
Stuart Wilson, chairman of Air Club, said: “The FCA’s Consumer Duty is the largest shake up in regulation for years with far reaching effects across all financial services firms. And 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.
“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. Now is the time to review, road test your approach and ensure that you understand the most current industry thinking on this fundamental change.
“At Air, we are committed to supporting advisers in the later life lending sector by providing the tools and information needed to achieve this. As we approach the implementation deadline, we will be hosting debates as well as webinars to ensure our advisers are as informed and prepared as possible.”
