Just 41% of advisers have started preparing for Consumer Duty

With less than 150 days to go until the FCA's new Consumer Duty rules come into force on the 31st July, new research from Aviva shows that just 41% have started their preparations, with a further 26% saying they had not started but are clear about what they need to do. 17% said they had no concerns.

When asked, over 8 in 10 (84%) advisers said that Consumer Duty feels like a rebranded Treating Customers Fairly (TCF).

Consumer Duty also appeared low down on a list of adviser concerns – ranking 11th out of 14. By contrast, the main concerns were listed as being inflation (mentioned by 39%), cost of living and the energy crisis (34%) and recession (32%).

One in three said their firm hasn’t appointed a Consumer Duty champion – despite this being a requirement by October 31st last year – casting doubt on whether all obligations are truly appreciated.

A majority of advisers said that compliance with the Consumer Duty will demand significant changes in their processes.

In a change that will have implications for platform providers, two-thirds (67%) of advisers said they will be carrying out fresh due diligence on the platforms they use, and 60% thought that their due diligence processes will change.

Al Ward, head of Aviva’s adviser platform, commented: “The Consumer Duty arguably represents the biggest shift in the regulation of financial services in more than a decade. It puts customers at the heart of all our businesses. It would be misguided to see it as a rebranding of TCF. The change is much more fundamental than that.

“In the words of the FCA, the Consumer Duty “raises the bar”. I agree. It is demanding a cultural shift that truly places the customer at the heart of everything we do. And, crucially, it will measure us against outcomes, not just actions.

“One of the most important changes that the Consumer Duty will demand of us is that we must provide evidence that we are delivering good outcomes. Whilst it’s encouraging to see a majority of advisers anticipating significant changes in their customer processes, I would invite advisers who feel no change is necessary to reconsider.”

Richard Farr, non-executive director at Comentis, added: "For only two-in-five firms dealing in financial services to have started preparing for Consumer Duty, at this late stage, is deeply troubling. This has to be taken more seriously. Everyone has to act.

“But with just four months left, is it even possible for those who haven’t yet started to be ready in time?

“The short answer is yes. Firms need to start looking at their existing MI through a ‘good customer outcomes’ lens. Across the sector, the big gap is in vulnerability data – firms have never properly collected it before, so this is a priority. If they can start gathering vulnerability data, and demonstrate that those in vulnerable circumstances receive the same outcomes as everyone else, it can be done. That said, this won’t be straightforward, given that most are currently behind. The alarming reality is that a large number genuinely don’t believe they have any vulnerable customers, something which is perhaps reflected in the fact that one-in-five seemingly aren’t concerned about Consumer Duty.

“Firms need to get moving. They need to start building datasets on vulnerability and they need to choose a means of consistently identifying at-risk customers, even in cases when the customer doesn't realise it themselves. If they can do this, it’s possible to be ready in four months. But what’s clear is that the FCA will allow no exceptions. Action has to be taken, and it has to be taken today.”