The consumer duty promises to be the biggest regulatory initiative in a decade, but while some advisers believe it will bring little change for them, others admit they are still somewhat confused by what is to come.
Quilter, one of the biggest advice businesses in the UK, says it has a "good idea" of what the rules will mean and has started to prepare for their implementation next April.
The Financial Conduct Authority consulted on the duty until February and is due to publish its final rules in late July, alongside its expectations and guidance for businesses on how to meet them.
Paul Young, head of business consultancy at Quilter Financial Planning, chats to FTAdviser In Focus about how Quilter is preparing for the new rules and the difficulties advisers may face.
FTA: How is Quilter preparing for the consumer duty?
PY: Technically the fine detail of the FCA’s consumer duty paper is still informed guesswork until final publication – that said, we have a good idea of the key content and issues due to the consultation papers.
As a large group with a number of different businesses each one will be preparing in a different way but from an advice perspective, we have already started a gap analysis against the high-level topics, especially on the four outcomes: communications; products and services; customer service; and price and value.
FTA: What are the most difficult processes to implement?
PY: One of the difficulties we are seeing is how to test, analyse and monitor process and outcomes from the consumer’s point of view while trying to be objective.
The challenge is how to capture the client's view without influencing it unconsciously, as we all have biases that can influence the questions we ask or the style of medium they are delivered through.
FTA: When did you start preparing and what would you say to advisers who have so far put it off?
PY: You could argue that we have been preparing for something like this since the Retail Distribution Review.
Similarly, we introduced our adviser delta formula in 2019, which focused on defining, articulating and demonstrating how much value advice brought to clients.
We started preparing in earnest since the first draft was released in May last year.
One of the key focus areas of the consumer duty paper looks set to be about helping put ‘customers in a position where they can make effective decisions.’
Behavioural economics plays a huge part in ensuring customers are given the right information and tools to make a decision and our focused behavioural consultancy team has been working with businesses and advisers on this.
FTA: What are the costliest/most difficult changes that many advice businesses might face?