Financial advisers plan to turn to their platform provider if the FCA implements its Consumer Duty regulations, new research from abrdn has shown.
According to the research, nearly three quarters (73%) of advisers are aware of the proposed regulations, with a quarter (25%) completely unaware.
If the rules – a final version of which are expected to be published by the FCA in July – are implemented as proposed, nearly half (46%) of advisers said they would turn to their platform provider for support with implementing the new rules. A slightly lower percentage (44%) would rely on internal resources, while a further two in five (39%) would engage their external compliance provider.
Abrdn said 54% of advisers expect their organisation will need to make procedural changes to comply, while 46% believe their firm will need to take on additional resources to comply. Those working in directly authorised businesses (50%) were most likely to anticipate hiring more people.
Alistair Black, head of industry change at 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 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.”
According to Black, there are a number of steps firms will need to take. For some, this will be similar to implementing the Senior Managers and Certification Regime, where there was no clear documentation to follow.
Black said: “The insight, and support, of suppliers – whether it’s 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.”
The research also looked at the challenges advisers face when it comes to the adoption of new regulation in general. A lack of understanding of new requirements (26%) was cited as the biggest hurdle, while 25% noted the financial pressure of increased overhead costs and a further 25% said they lacked capacity within their business to support the administrative burden of new regulation.
Black added: ““Regulation needs to evolve to ensure that advisers, and their clients, remain 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.”
