While advisers and intermediaries across the board have been given an extension by the Financial Conduct Authority to comply with its new consumer duty, it is important to use this time wisely.
They have always wanted to put the customer first – it is at the heart of what they do – so the new duty will help do just that and is a welcome measure.
That said, how this is done needs addressing. With increasing digitisation across the sector as a whole, expedited as a result of the pandemic when most services had to go online, the amount of data held by brokers on their customers is larger than ever.
Whether it is held on email or handwritten notes, a personal drive or firm-wide system, how this data is handled and managed will be vital, not only from a data protection standpoint but also to help brokers best serve their clients and comply with regulation.
Structured vs unstructured
The quality of the service any broker will be able to provide their customer ultimately depends on the quality of the data they hold. Without having control of their data in one secure, organised place, it is impossible for brokers and intermediaries to put the customer at the centre of their operations.
That means good data governance is directly related to compliance with the new consumer duty. The main stumbling block that stands in the way is unstructured data.
Data can be categorised as structured and unstructured. Structured data can be read by a machine and can therefore be used to provide data-driven insights for effective decision-making.
Unstructured data is everything else, including data that is not detectable by technology, such as letters, PDFs, emails or even notes from face-to-face meetings with potential clients.
At present, it is estimated that around 10 per cent to 15 per cent of a company’s files are unstructured, showing just how rife this problem is across the board.
This matters both from a data security and GDPR perspective, as well the ability to comply with the consumer duty. The cyber risk such data presents is almost tangible, making it much easier for hackers to access sensitive information, while its scattered nature means it cannot be analysed or drawn upon to provide insights that can inform advisers on the best outcomes for customers.
The question advisers need to be asking is whether or not they have a good strategy for handling the data they hold in order to make regulatory compliance easy for themselves.
Vital data governance
Ultimately, the data you get out will only be as good as the data you put in. If a repeat customer approaches a broker for advice, providing the best service means knowing what products they already have, what their situation is and what might be appropriate. That cannot happen if each adviser has their own notes stored in a multitude of ways.
Implementing a robust data strategy that organises and stores such data in a way that makes it transferable across an entire organisation for all advisers to access is key, and there are tools available that help firms do this in a cost effective and efficient way.