The 31st October is always a big day in the calendar, although this year is a little different. Halloween may still be the headline act across the UK but this also marked the date when the Chancellor of The Exchequer Jeremy Hunt was expected to deliver the eagerly anticipated Medium-Term Fiscal Plan (which has just been put back until 17 November and ‘upgraded’ to an Autumn Statement) and also the deadline where firms’ boards (or equivalent management body) should have agreed their Consumer Duty implementation plans.
Consumer Duty is a topic which has been focused upon quite a bit in our excellent trade press but, to recap, in July 2022 the FCA set out the final rules and guidance that will set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first. Essentially it means that consumers should receive communications they can understand, products and services that meet their needs and offer fair value, in addition to getting the customer support they need, when they need it.
But we already do that I hear you cry. I hear you, but do you have the processes and support network in place to successfully evidence this?
The sentiment behind this initiative is fundamentally sound and it’s in everyone’s best interest to deliver the best customer service in the most effective, efficient and compliant manner. However, this signifies yet another admin hurdle for directly authorised brokers whose time and resources are already being stretched. And that’s for those who are even aware of Consumer Duty, let alone how to tackle it.
Recent data from Moneyhub highlighted a significant knowledge gap across many firms; 38% of senior decision makers said they had either limited or no knowledge of the upcoming Consumer Duty legislation. For many of these firms, technology holds the key to Consumer Duty preparedness. 48% of firms plan to or are already investing in technology to develop and deliver more personalised and targeted communications and 41% also have plans to invest in technology in order to access customer data and insights.
Technology can obviously help but it also comes at a cost. In addition, to deliver the best outcome for the whole lifecycle of a product, advisers need to be fully versed on all lenders they deal with.
As a network with a specialist lending background, we know how tough it is for advisers to be in a position to scrutinise the suitability of each and every lender, especially in the more specialist sectors they may not deal with on a regular basis. Which leads to the questions, might this result in some DAs having to limit the options available to their clients? Might it also increase the prospect of them joining a network who can offer access to such lenders in a compliant manner?
These are difficult questions to answer comprehensively. Although from speaking to DAs in recent times, the network route is one that a growing number are seriously considering. This is not just because of the Consumer Duty implications but due to an accumulation of factors which are making the network option an increasingly attractive one.
Especially for those looking for a network with an in-house packager who has an in-depth knowledge of the specialist lending market which can help advisers to deliver the breadth of solutions to match their clients ever-changing needs in such a turbulent political and economic climate.
Donna Wells, Director at Envelop