The first year of consumer duty has been a challenge the industry has risen to, but more of this is on the way, says Kevin Silvester.
The head of strategic adviser partnerships at RBC Brewin Dolphin says the past year has been "frenetic" for many advice firms as they scrambled to gather and present evidence they are meeting consumer duty rules.
But, he adds, the Financial Conduct Authority has been clear this is not a “one and done” initiative but a cultural change that needs to be embraced, and more of this is on the way.
In a Q&A with FT Adviser In Focus, Silvester gives his take on how the industry has fared under the consumer duty and what comes next.
FTA: Consumer duty a year on – how would you sum up its effect on the industry so far?
KS: There is no doubt that consumer duty has had an enormous impact on our industry over the past 18 months.
We all started planning for its implementation way before the July 31 2023 deadline.
Like many firms we were confident that our culture would fit well within the consumer duty’s key principles, as set out in the cross-cutting rules:
- Acting in good faith.
- Avoiding foreseeable harm.
- Enabling and supporting customers to pursue their financial objectives.
And we firmly believe that this has been the case. However, we were also conscious that we needed to evidence this and ensure that we made that information available well in advance of the implementation date, and that work has stood us in good stead in the past 12 months.
But we’re not complacent and we’re constantly challenging ourselves to develop our services and support network to enhance the experience we give to clients.
FTA: To what extent has the industry embraced the new rules?
KS: In some areas this has been a real challenge and we all must continue to guard against complacency.
The regulator has been clear that this isn’t just a “one and done” initiative and that this is a cultural change for the industry that needs to be embraced, and made a fundamental element of a business's strategy.
To reinforce that view, the FCA has been clear with its expectations in the 'Dear CEO' letters, and we have already seen direct intervention in some areas where they have not seen the speed of change that they desire.
FTA: Some say the first phase was the big one. Would you agree?
KS: Well, there’s no doubt it was a huge piece of work with a tight timeline for implementation, just as the closed products follow-up is also challenging.
I firmly believe that it will be just as challenging going forward, as the industry innovates and brings new products and services to the market, and we must apply at least the same amount of oversight to those.
