Consumer Duty: Data strategy is 'key' for financial advisers

Speaking at the Empowering Advice Through Technology 2023 conference today (26 January), Change Squared director of progress Ben Wright said it was possible advisers had not had to do this before but data needed "to be top of everyone's agenda when it comes to Consumer Duty."

Wright was part of a panel discussion on the incoming Consumer Duty rules which new onus on both providers and advisers to put the needs of the client first.

He said: "Most advisers do their best to avoid foreseeable harm already. I am hoping people are starting to move towards outcome-based planning. The key for financial advisers is their data strategy. They have not had to do this before.

"Most people are doing a good job but Consumer Duty requires you to document in much more detail. That needs to be top of everyone's agenda when it comes to Consumer Duty."

EV group innovation director Andrew Storey and Fidelity Wealth Management head of advice policy and proposition Dawn Mealing joined Wright on the panel.

Fidelity launched its restricted advice arm in January 2021. Mealing agreed the advice journey, and its documentation, was essential for compliance.

"The key thing is about understanding your client, client journeys, your advice journey. Where the gaps are and make sure you close those gaps," she said.

Mealing added that advisers would also face considerable time pressures on the value for money element of Consumer Duty.

She explained: "You need to think about deadlines that are looming. One of the challenges for IFAs is that we all have to implement by end of July.

"For manufacturers it is April and then for advisers, July. IFAs have to consider value for money for everything it distributes.

"As manufacturers have a July deadline, IFAs need that information to make value for money judgements. IFAs have then not got much time to consider that.

"Make sure you have your plan, test you systems and be ready to execute your plan because you are not going to have much time to do it. Be ready."

Storey added that from a planning perspective, advisers should look at levelling up their technology to make sure it is "covering all the elements".

"If you know about something that could cause a problem your planning needs to take that into account. If you knew that could have happened, why didn't you plan for it?

"Sequencing risk is sort of thing that looking back on it, yes it is obvious, but are you doing that now? Because of Consumer Duty you have to step up to the next notch in taking it seriously," he said.

Wright added that advisers should take the opportunity to look at all the processes in their business.

"You are going to have to make changes because of Consumer Duty. Right now, look at all of your processes and go through step by step - are they the most efficient way of operating? Will it provide the data that you need?"

He also said firms should test their plans now to make sure they work before the deadlines.

Storey also suggested advice firms should break compliance down into smaller steps.

"Making a decision to make a change is easy. Making the change is hard," he said. "We need to take small steps. Do simple things to get you going. Break it down into smaller steps."

Read more - Coverage from EATT2023