Consumer dutyMar 23 2023

Consumer duty will 'challenge' legacy systems

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Consumer duty will 'challenge' legacy systems
Financial technology needs to be fast and modern, says Roy McLoughlin, director at Cavendish Ware.

Consumer duty means legacy systems and closed books will come under increasing scrutiny, a senior director at iPipeline has warned.

Paul Yates, product strategy director at iPipeline, said: “As we know, consumer duty is challenging the service and outcomes delivered for clients with policies held on older inflexible systems.

“The FCA is also expecting there to be ‘significant issues’ with closed books among life insurance providers. Delivering the ability to move clients with confidence is a significant step forward.”

The FCA made this clear in its 161-page policy statement PS 22/9: A new consumer duty, which provided feedback and final rules on the original consultation paper. 

Advisers need providers’ technology to be modern, fast and reliable.Roy McLoughlin, Cavendish Ware

But according to Yates, legacy platforms present pensions, savings, and investment providers with huge challenges.

He explained: "They often lack stability and reliability, connectivity and efficiency. Some providers are operating tech stacks that are not years, but decades old, so replatforming is essential.

"There is often a huge challenge to overcome, however, in realising the full benefits of a new platform involving data and back book migration. Migration can add a layer of complexity, cost, and risk for providers and, on occasion, be a reason to delay a re-platform, exacerbating the legacy issue."

His comments came as the financial services technology provider launched a data migration solution which will enable pensions, savings, and investment providers to replatform faster than ever before.

iPipeline's new data migration technology, alongside its SSG Digital platform, will allow providers to ‘lift and shift’ their data quickly and efficiently, avoiding any disruption in the user experience for advisers and customers, and minimising the risk of increased project costs associated with converting data.

iPipeline’s new solution will speed up migration by recreating records on the new system using the source data, rather than converting and manipulating existing data.

According to Yates, there are significant benefits of this approach. not least the fact this measure can protect data integrity and robustness between migrated and post-migration data, while eliminating the risk that the migrated data is not compatible with the new platform.

He said because providers can replatform faster, and at reduced costs, to protect margins, it will lead to improved outcomes for advisers and their clients. 

Adviser verdict

Roy McLoughlin, an adviser at Cavendish Ware, said: “Advisers have suffered in the past from the poor service and administration that comes, in part, from providers that have poor technology infrastructure.

"Any innovation that can make it quicker and more reliable for pensions, savings, and investment providers to modernise their proposition should be good news for advisers and customers."