Industry members have raised concerns there is a risk of complacency when it comes to the consumer duty, given some advisers’ views that nothing needs to change.
The Financial Conduct Authority's first deadline for the consumer duty is today (October 31) and while some advisers have said they are prepared, there is a looming concern among other industry members.
In July, the regulator published a policy statement which outlined that it was giving firms an additional three months to implement the new consumer duty rules.
The FCA announced that companies will have until July 31, 2023 to implement the consumer duty rules for all new and existing products and services that are currently on sale.
However, Warren Vickers, managing director at Tenet Compliance Services, said despite this extension, “the grit in the oyster” is the October 31 deadline for all firms to have their implementation plans in place.
“Plans need to be properly documented and made available on the regulator’s request,” he said.
“However, without the impetus of having to make a submission, it’s likely many advisers will let the deadline slip by and leave themselves open to both not meeting the broader implementation deadline and regulatory scrutiny.
“It’s true that many advisers will already be operating in line with the duty’s broad aims but that brings with it the misconception that nothing needs to change. Expectations are increasing and compliance with existing standards alone won’t be enough.”
Likewise, Nathan Fryer said as an outsourced paraplanner, he is looking at ways to help advisers comply with section eight which is consumer understanding.
“At the moment as I think most advisers do, we have a signature page which clients basically tick to say they understand,” he said.
“We are looking at ways we can enhance this process to help demonstrate client understanding without increasing the level of paperwork and disclosure that clients already have to deal with.
“In terms of consumer duty overall, I think a lot of advisers do what they are supposed to do, however a lot of it is stored in the advisers head (one man band especially) and while that is great, what process do they have in place to question their own processes and procedures?”
Fryer said the majority of advisers do the best for their clients, and the majority of them will not have a great deal to do other than perhaps document what they do and why they do it.
No change needed
Speaking to FTAdviser, Matthew Walne, chartered wealth manager at Santorini Financial Planning, said having gone through his consumer duty checklist, it would seem that most of the focus is on product providers and not advice firms.
“Having reviewed my action plan I don’t have to change anything,” he said. “I’ve recently updated my vulnerable client process, so nothing else needs to be changed or updated.