The additional burden of reporting and responsibility that comes with the consumer duty has been one of the biggest things causing advisers angst, according to Scott Dakers, business development director, Square Mile.
Speaking to FTAdviser, Dakers said most advisers that Square Mile deal with do understand the duty, but are frustrated by it to some degree.
“We know the consumer duty was really imposed on the whole of UK retail financial services - it was never specifically aimed at the advisory profession, because they've always been held up to some degree as the shining beacon of this is what good looks like,” he said.
“However, any broad-brush legislation that comes in has an impact and has unintended consequences.”
For a lot of advisers, consumer duty has necessitated a lot of reading documentation and putting measures in place to prove what they have always been doing - namely focusing on the best client outcome.
“We spend a lot of time working out how we support that because before it was a very clear cut relationship that the adviser had with the client now it's a little bit more fuzzy around the edges,” he said.
“That was the responsibility for providers like us, not to be engaged directly with the client but to provide more support to that end consumer.”
As the consumer duty came into force on July 31, Dakers warned that advisers should remain "on the front foot" even after implementation.
“Some of the challenges for the broader industry is that for some advisers, there had not been the sense of urgency around consumer duty [as other regulation, such as the RDR].
"There may have been the sense that the FCA have had bigger fish to fry and they are not necessarily looking at some of the smaller firms,” he said.
“But for the six-man business, the four-man business, it wouldn't be the first time I've heard advisers [from firms such as these] say: 'Well, I've not had a visit in 25 years'.”
However, he argued that these firms need to be very careful as this is the first time that it's going to be absolutely digital, with regulatory algorithms checking things.
He warned: “There are lots of very smart people working in the FCA, who will be building algorithms that will go through the return. And if the return is not showing what the FCA warned in terms of consumer duty, I guarantee they're going to get a visit.
“Given how hard they've been pushing this and the rhetoric coming from the regulator, there is a very good chance that they will make an example of somebody very quickly.”
Dakers said the consumer duty is something to be wary of and advisers need to be on the front foot, and prepared for "what is coming around the corner".
