"It’s clear that the majority of are already reviewing what it means for their business, and are anticipating the need to change processes, procedures, and even hire, to ensure they are aligned."
73% of advisers are aware of the proposed regulations, with a quarter (25%) entirely unaware. Awareness is highest among those working in networked firms (75%), and lowest among those at firms with restricted direct authorisation (69%).
If the rules – a final version of which are expected to be published by the FCA in July – were implemented as proposed, nearly half (46%) of advisers with an understanding of the requirements would turn to their platform provider for support with implementing the new rules.
Just over two in five (44%) would rely on internal resources, while a further two in five (39%) would engage their external compliance provider.
When asked about the anticipated impact of Consumer Duty on their firms’ own operations, more than half (54%) of advisers expected their organisation would need to make procedural changes to comply.
Just under half (46%) expected their firms would need to take on additional resource to comply – with those working in directly authorised businesses (50%) most likely to expect the need for further hiring.
Meanwhile, just over two fifths (44%) expected to see overhead costs increase. Those in networked businesses least expected to see a financial impact (35%), rising to more than half (51%) of advisers in directly authorised firms.
As the publication of the final Consumer Duty rules approaches, abrdn’s research also explored where firms saw challenges when it came to the adoption of new regulation in general.
Advisers most frequently pointed to a lack of understanding of new requirements as their biggest hurdle (26%), with a quarter (25%) citing the financial pressure of increased overhead costs.
A further quarter (25%) said they lacked capacity within their business to support new regulation’s administrative burden, while just over one in five (23%) said they struggled with implementation deadlines being too tight.
Alastair Black, head of industry change at abrdn, said: “Consumer Duty will be a big step change for advisers when it comes into force next year. It’s clear that the majority of are already reviewing what it means for their business, and are anticipating the need to change processes, procedures, and even hire, to ensure they are aligned.
“At its core, Consumer Duty is about good governance, which will touch on all parts of firms’ operations. With this in mind, it’s encouraging to see that advisers will be turning to a range of sources to aid their compliance efforts, including their third-party partners.
“Consumer Duty is essentially advocating good customer outcomes which is already at the heart of everything an advice firm does. So, while it’s encouraging to see firms considering its implications, the change may not be as big as some fear.
“However, there are a number of important steps all firms will need to take. For some this will be similar to implementing the SMCR (Senior Managers and Certification Regime) where there was no clear documentation and rationale to follow. For example, there are some elements that may be new for some advice firms, like documenting how they determine their advice service and charge is good value for money.
“The insight, and support, of suppliers – whether it’s platform technology, or otherwise – that understand the regulations, and what it might mean for individual businesses, will be hugely valuable to delivering the outcomes the new regulation aims to achieve.
“Regulation needs to evolve to ensure that advisers, and their clients, remains supported and protected. But we know that adapting – particularly to major changes – takes significant amounts of time and resource.
“Working with the right third-party partners, with right experience and expertise, can help advisers move at pace to tackle the knowledge barrier, reduce the cost of implementation and ease capacity pressures – ultimately enabling advisers to spend more of their valuable time on doing more for their clients.”