The biggest challenge consumer duty will bring for most firms is making sure everything is documented clearly to show compliance with the regulations, according to outsourcing financial services firm The Verve Group.
Speaking to FTAdviser, the group’s chief operating officer, Jo Campbell said 90 per cent of advisers are already fulfilling the objectives of the new regulation but that a big element of it will be “making sure that when the FCA comes knocking, you’ve got everything documented”.
“We deal with quite modern, forward-thinking advisers. They are already doing it, it’s just a case of is it documented correctly?
"I don’t believe there are many bad advisers out there not caring about the client, it’s just whether you can display that you are,” Campbell said.
The Verve Group started training sessions, webinars and consultancy for advisers on consumer duty this year through its Apricity business in the run up to next year’s implementation deadline of July 31.
It has also made a number of free resources available on its website for advisers to use in preparation for the regulation change, including a document checklist and a risk assessment to help firms consider how to implement the rules into their business.
Worries about looming deadline
First proposed in May 2021 by the Financial Conduct Authority, the consumer duty imposes new standards on financial advisers in a bid to create a higher level of consumer protection in retail financial services.
From running the webinars and training sessions, Campbell has gotten the sense that most advisers are a bit worried about the looming implementation deadline as they do not want to “fall foul” of the new rules.
Despite this, she believe the deadline is an achievable one for firms.
“It is realistic if you start out in exactly the same way you do with investing - little and often," Campbell said.
“But there are so many different elements to it once you start looking, so it's important to not wait until the end which is why the FCA have done it this way."
The Verve Group, which also runs the outsourcing paraplanning firm Parasols, has been working on a number of templates firms can use to help with implementation, with a key aim of their approach being to try and create systems that are as “personal as possible but still as efficient as possible”.
Campbell notes that trying to strike this balance has “always been the bane of any paraplanner’s life”.
A lot of it can come down to small, simple changes, according to Campbell, such as taking out information that is not needed in a suitability report or making better use of colour, graphs and charts.
“We've done a lot of stuff with interactive reports, which is embedding videos, hiding information and layering it, so you can click on something and it'll pop out but it's not just there all the time,” Campbell said.
