What are the challenges for Financial Advisers of Consumer Duty Compliance?

Simon RoderickResearch, insights & industry news

What are the challenges for Financial Advisers of Consumer Duty Compliance?

Financial advisers in the UK face numerous challenges in ensuring consumer duty compliance.

Fram’s Wealth Management Practice is, I’m delighted to say, very busy. As the world becomes more complex, people need more advice, but the industry is far more regulated than when we first started covering the market at Fram in 2010. The latest change is Consumer Duty, which we focused on in our recent roundtable event with guest speakers from Bovill.

Financial advisers in the UK face numerous challenges in ensuring consumer duty compliance. The Financial Conduct Authority (FCA) has established strict rules and regulations that financial advisers must follow to protect consumers and maintain the integrity of the financial market. The enhanced duty to consumers is another part of this ongoing elevation of customer protections. In short, Financial advisers must balance their duty to protect consumers with their own commercial interests. For example, they must be transparent about the products and services they offer and the fees they charge, while also ensuring that they are making a profit. Balancing these conflicting interests can be a challenge, particularly when the adviser is faced with conflicting demands from clients and the regulator. The main principles of the new Consumer Duty are:

  • A new Consumer Principle that requires firms to act to deliver good outcomes for retail customers
  • Cross-cutting rules providing greater clarity on the FCA’s expectations under the new Principle and helping firms interpret the four outcomes
  • Rules relating to the four outcomes they want to see under the Consumer Duty.

These outcomes relate to:

  • products and services
  • price and value
  • consumer understanding
  • consumer support

I think it’s hard to argue against improving consumer protections, but it mustn’t be underestimated how much time firms are dedicating to ensuring that they meet the new standards. Each one of the outcomes and their impact of their implementation needs to be tested and scrutinised to ensure policies and procedures meet their demands. The vast majority of adviser firms are run with the client front and centre of their proposition, but management and compliance teams are flat out working on these new rules. Like with RDR, you can’t underestimate the additional burdens regulatory change places on firms grappling with busy business as usual issues. Therefore, stretch time short teams will be the biggest leadership challenge for many wealth managers.

Leaders will need to carefully coach and support their teams through this intense time, and may need to look for additional ways to support the mental health of their colleagues.

About Fram Search

Established in 2010, Fram Search is a specialist financial services recruitment consultancy. We focus on mid-to-senior hires in the UK and internationally. Fram has one of the leading Wealth Management recruitment Practices in the UK.

We provide high quality contingent and retained recruitment services to boutiques and global brands. We have long established relationships, outstanding market knowledge, and access to deep talent pools. Fram takes a highly consultative approach, combining outstanding tech with a human approach. We are proud that our contingent fill rate is nearly three the industry average and we augment our retained search methodology with rigorous psychometric testing. We take ESG seriously, we are champions of diversity and all staff have undertaken unconscious bias training, we also carbon offset.

Please contact us on 01525 864 372 / [email protected] to learn more.

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