How will consumer duty affect advisers' day-to-day role?

How will consumer duty affect advisers' day-to-day role?

The new consumer duty, for which the rules were confirmed in July, won’t see a substantial amount of change for advisers, according to the guests on the latest FTAdviser Podcast.

The Financial Conduct Authority has published its policy statement which outlined firms would have an additional three months to implement the new consumer duty rules.

The FCA previously said there would be an implementation date of April 30, 2023 but many firms complained this would not be enough time.

However, this week's podcast guests told FTAdviser there was likely to be little change coming for advisers. 

Head of public affairs at Pimfa, Simon Harrington, said: “One of the really interesting things about the consumer duty is that it isn't actually immediately clear to me that the day-to-day role of an adviser will sort of change substantially. 

“The actual sort of provision of giving advice, assessing suitability and of discharging your obligations under principles six and seven will largely be the same. 

“The shift in focus, at least my analysis of it, is that there will now be significant focus and responsibility on advisers and firms more broadly, to evidence why they are making decisions.”

Harrington explained that the actual process of giving advice will be very much the same as it is today but the challenge and the focus will now be steered upon looking at the plumbing, and the infrastructure that sits behind it.

He said it will focus more on evidencing why an adviser or firm has made a decision.

Likewise, Lang Cat consulting director Mike Barrett said it is a case of “evolution rather than revolution” from the advice process. 

“Those who can remember back to RDR, that was a significant change for advice firms with a huge amount of work which they had to do simply in order to be able to open up the doors and trade on the Monday morning,” he said.

“The consumer duty is by no stretch of the imagination at that level.”

Barrett said: “The theme of proportionality is one throughout this and the reality is that the majority of advice firms tend to be very, very small, one person band businesses in a lot of cases and a lot the governance structures, product design, service design, testing the consumer outcomes - that stuff, in terms of proportionality, probably won't apply. 

“A one man band isn't going to have to appoint a board and a non executive director to that board to deal with all of this.”

He explained that day to day, advisers’ lives should get a lot easier.

“A lot of the consumer duty requirements for service standards, the quality, the transparency and the understandability of the information which has been presented to consumers, those apply as much in an advice channel as they do in a direct to consumer channel,” he said.

“So we would expect some of the kind of perennial moans we hear from advisers about service standards, being on hold for 30 minutes delays with platform transfers, re-registration - those things in theory should go away on the consumer duty.”