Consumer service is proving the hardest part of Consumer Duty to comply with for advisers, new research from abrdn has shown.
Six months on from the introduction of the new regulation, advisers said providing services in a way that meets clients’ needs (44%) is their most challenging area.
This was closely followed by ‘consumer understanding’ (39%), which entails providing information in the right way at the right time and demonstrating that clients understand, and ‘products and services’ (37%).
In contrast, ‘price and value’, ensuring clients receive fair value on the services provided to them, was the area of Consumer Duty where the fewest firms reported challenges demonstrating compliance (33%). However, abrdn said directly authorised firms experienced far more issues with price and value (46%) than firms with restricted authorisation (22%).
Alastair Black, head of savings policy at abrdn, said: “While we may have expected to see one area of Consumer Duty stand out more as being an area of focus, our research shows that, on the whole, adviser firms are as likely to be working on any of the four outcomes.
“To me, this highlights the fact that every firm is dealing with a slightly different set of challenges. But it also indicates that there are many businesses that have developed a strategy for success.”
Black said that as Consumer Duty beds in, the Financial Conduct Authority may pick out and share examples of best practice.
“Right now, there’s a clear opportunity for the industry, including advisers’ partners, to share learnings and successes themselves; to take hard-won solutions and match them to ongoing issues. Everyone’s likely to benefit from something,” he said.
According to the global investment group, firms are taking several steps to support their ongoing compliance. Nearly a fifth of advisers (19%) are improving how they gather client feedback, while 18% are improving or introducing new systems to capture management information and the same number are reviewing customer communications.
In addition, 17% were also starting to use, or increasing the use of, an outsourced Managed Portfolio Service. abrdn said advisers were most commonly gathering management information from staff surveys (20%), the outcomes of client reviews or the review of client files (19%) as well as identifying clients paying above-average charges (19%).
Black added: “A key takeaway from this research is that everyone is prioritising something to help maintain their compliance. The industry is, as expected, fully behind the FCA’s aim. It’s encouraging to see such a focus from firms on using their management information as a tool to self-assess areas of risk and foreseeable harm and to measure progress.
“Taking a detailed compliance approach to Consumer Duty is important. But to really align with the spirit of the regulation and to do so efficiently, firms should also be testing themselves against the big picture; the goal of delivering better outcomes for clients. Keeping this front of mind will help minimise the risk that progress towards this goal is smothered by the process.”