Turo blog

Consumer Duty: The Business Benefits for Financial Firms

July 18, 2023

"It is crucial for firms to look beyond the 31 July deadline and consider not only how they ensure compliance with the Consumer Duty ruling but also how it positions them in the market."

As the Consumer Duty deadline looms, Wealth Wizards' Business Development Director Nick Hall shares insights on the importance of looking beyond compliance and leveraging Consumer Duty to gain a competitive edge.

With the Consumer Duty deadline now imminent, all financial advice firms are expected by now to be fully prepared or in the final stages of complying with the new rules. However, it is crucial for firms to look beyond the 31 July deadline and consider not only how they ensure compliance with the Consumer Duty ruling but also how it positions them in the market.

The FCA sees Consumer Duty not just as more than just a means of aligning the market with its customer-centric approach; it also aims to stimulate innovation and competition.  This objective aligns with the Regulator’s ambition of enabling more UK consumers to access financial advice.

We identify three clear business benefits brought about by Consumer Duty:

1 Building Trust through Compliance

• The Consumer Duty rules foster increased trust in financial advice.
• Compliance with these rules ensures transparency and accountability.
• By adhering to Consumer Duty, firms demonstrate their commitment to serving clients' best interests.
• Building trust strengthens client relationships and enhances reputation.

2 Expanding Access to Financial Advice and Guidance

• Consumer Duty aligns with the regulator's goal of expanding access to financial advice.
• Compliance with the duty helps firms improve visibility in the market.
• Increased visibility attracts a wider client base and generates more opportunities.
• Firms prioritising visibility gain a competitive advantage and position themselves as industry leaders.

3 Business Growth Opportunities

• Consumer Duty presents significant business growth opportunities.
• Forward-thinking firms focus on scaling up and capitalising on these advantages.
• Embracing the duty can lead to increased revenue and market share.
• Major players, networks, and consolidators are keen on leveraging Consumer Duty for sustainable growth.

There are three key elements for growing advice businesses to both meet the Consumer Duty requirements and build for the future. They are:

1 Consistency of process – ensuring compliance with the firm’s policies and maintaining alignment.
2 Consistency of delivery – ensuring that every client receives the same high level of service.
3 Efficient use of resources – maximising the value of your most valuable resource, your staff, to enhance the client experience and relationships.

Digital solutions can facilitate each of these elements.

Digital solutions enable engagement with clients, such as gathering relevant information through fact-finding, identifying their needs and goals, and providing advice and recommendations through suitability reports. The entire journey can be personalised for the client, aligning with the firm’s advice policies and remaining fully compliant.

By guiding clients through a digital journey, the level of service delivery can be consistent and tailored to their individual needs and goals. Technology can automate the heavy lifting of the advice process, such as digitising fact-finding, populating data entry fields, generating suitability reports, validating data, and providing automated fund recommendations where appropriate. It also ensures that clients fully comprehend the advice and recommendations offered.

This frees up advisers, paraplanners, and administrators to focus on the aspects of the advice process that truly add value for the client – how their relationship with your firm helps them meet their financial needs and achieve their goals.

Moreover, from a Consumer Duty perspective, everything can be automatically recorded as evidence of delivering positive outcomes.

First Published by FT Adviser June 7th 2023: https://www.ftadviser.com/fca/2023/06/07/crucial-for-firms-to-look-beyond-consumer-duty-deadline/

Written by
Emma Rose

Find out more about Turo and how it can automate key parts of the advice process for your clients and advisers.

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