The board signed off on the project a few days before the July 31 deadline, concurring with my and the champion’s assessment that we were ‘materially’ compliant.
It would be difficult to confidently state that we are 100 per cent compliant at the time such is the scope and expectation of the new duty which the industry is still trying to get to grips with.
Harnessing the domino effect
We have found that implementing consumer duty processes has served as a powerful catalyst of change within the business – change which previously had only been discussed and not yet actioned.
As a business we have been upskilling our investment managers so that they have the appropriate skills and knowhow to provide broader financial planning advice, which we believe will greatly benefit clients and lead to much better outcomes, as clients will pay for advice and there will be no product or provider bias.
With the implementation of the consumer duty, we envisage that less money will flow into bespoke DFM due to the increased cost and whilst it will be suitable for some clients, we see a much larger target market in the future for less complex and cheaper MPS type solutions.
The consumer duty’s ‘fair value outcome’ will potentially make bespoke discretionary management more difficult to recommend and narrow the target market for it which will lead to more discretionary fund managers launching simpler, lower cost solutions. Something that BRI can already do.
Also, the new consumer duty rules are generating greater awareness of total costs in the distribution chain and at BRI, we are working hard on driving down costs where we can. We’ve noticed that fees for advice seem to be holding up well, but product and investment costs are increasingly under pressure. These pressures are leading to improved value for money for clients.
Looking to the future
The consumer duty deadline may have passed, but there’s still more work ahead.
We will be closely monitoring our activities and collecting consumer duty relevant management information to ensure we are continuously providing good customer outcomes, complying with the new rules and can demonstrate this to the FCA if asked.
The implementation process has also helped us identify areas which would benefit from further consideration, such as how we explain our costs and services to potential clients, both in written form and via our website.
Whilst it is early days in the consumer duty journey, we are confident the new requirements will bring positive change in the industry where other initiatives have failed to do so in the past. It’s been a driver for change at BRI, and hopefully this will safeguard our prosperity and that of our clients for many years to come.
