Wealth management firms can use the new Consumer Duty rules as an opportunity to build their operational robustness and technology, through enablement software, can help, explains Rachael Rowe, RVP for Financial Services at Seismic.
Britain’s Financial Conduct Authority (FCA) got tough on investment firms in December, cracking down on a practice called ‘double dipping’, where companies earn interest on client cash while charging fees to hold it. More than a message, it’s a warning to financial firms: the FCA is serious about its new Consumer Duty regulations.
Financial services firms now face pressure to meet new rules on client care, protection, and clear communication from 31 July.
It certainly means a total reorganisation of their internal workings, how they interact with clients, and how they achieve compliance. The FCA wants financial firms to truly improve their services for the long haul, forcing wealth managers to learn from other industries and find creative ways to run oblige.
So, is this simply extra work and enforced punishment that can and will be circumvented? Or is it perhaps an opportunity to get ahead of competing firms? Let’s find out.
Consumer Duty – a new bar
The FCA’s Consumer Duty is a game-changer for financial services. Forget simply following rules to avoid punishment; this is about a complete change in approach. Financial firms now need to design everything – products, services, and even information – with their customers’ needs at the forefront.
For example, the days of confusing language, jargon, and hidden terms are over. Clear communication is now mandatory, empowering clients to make informed decisions at every step of their financial journey. Additionally, firms must be ready to offer the right type of support when clients need it.
In addition, the new regulations recognise the need to pay special attention to vulnerable clients and those facing difficult circumstances. Their needs must be understood and addressed.
It’s a new bar for how firms should operate: acting honestly, protecting clients from foreseeable harm, and actively guiding clients towards their financial goals. And it’s not a one-time thing, either – the FCA expects ongoing efforts to deliver the best possible outcomes for all clients.
The consequence for wealth managers
Wealth managers can approach this situation in two ways. A: They can seek the path of least resistance to circumvent these regulations and keep business as usual. But, more so than previously, this is risky business. If you look at the warnings firms faced in December, the FCA is making a pretty aggressive statement about its tolerance for this type of behaviour, which is exactly why it released the regulations in the first place.
B: A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. And optimists will see these new regulations not as a prison sentence but as an opportunity to innovate. A chance to transform how they view compliance from a regulatory necessity to a part of their business plan – and firms that genuinely prioritise client outcomes over internal sales targets will set themselves apart in this newly-focused marketplace.
Sure, it will mean a lot of work to get started. But going above and beyond with these changes will become differentiators for new clients, acting as launchpads for new business.
For the firms that go with option B, that is.
Option B: enablement software
The reality is that the financial services industry is just catching up. Many industries, such as tech and healthcare, have been using tailor-made ‘enablement software’ to improve customer experiences and make compliance part of their business for years.
These industries don’t see regulations as burdens but as opportunities to train staff and create amazing experiences for clients. Instead of extra work, they use specialised tools to connect with new customers, gather valuable data, personalise interactions, and deliver impactful meetings that showcase their expertise.
Compliance is the foundation, sure. But they build way beyond that.
The real goal is happy clients. And these organisations use technology to empower, assist, and cut challenges instead of corners. Imagine AI training that keeps employees sharp and on-point, building trust with clients through their expertise. AI-powered enablement can automate note-taking and summaries and even generate content for presentations and follow-ups, freeing up valuable time.
And to ensure everything resonates with clients, AI can analyse massive amounts of content to see what works best. While these examples don’t directly address compliance, they all support the core principles of the FCA’s Consumer Duty. Each firm needs to figure out how to collect data to prove good client outcomes, but without the right technology, meeting all the regulations can be a real challenge.
Conclusion
Success from the 1 August hinges on seamlessly connecting data, technology, and people. The FCA is showing teeth, and its Consumer Duty rules are a game-changer that should not be ignored or circumvented. After all, it aims to create a fairer, more transparent industry that truly puts clients first.
Some wealth managers might see this as a hassle, a mountain of extra work. But for those who embrace it, it’s a golden opportunity. The good news is that wealth managers can learn from other industries already using enablement technology to improve operations, deliver exceptional client experiences, and comply with the regulations.
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