New research has suggested investment, pensions, and wealth management firms still have a poor understanding of the Financial Conduct Authority’s (FCA) upcoming Consumer Duty regulations.
With just nine months until current products and services must be compliant, research by Moneyhub found a striking 51% still had no plans in place – fuelling concern many will not be ready, despite the FCA asking boards to approve plans by October of this year.
What’s more, one in 10 CEOs, Chairmen, Chairwomen, and Directors of these financial firms profess to having a limited understanding of the upcoming regulations, despite 69% saying the changes will have a “significant impact” on their way of doing business.
The idea of the regulations is to benefit both financial services providers through greater degrees of knowledge, understanding, and transparency – something that will then be passed onto consumers through improved customer support and understanding of the benefits and risks associated with products and services.
Samantha Seaton, CEO of Moneyhub commented: “The Consumer Duty will test just how customer-focused businesses truly are,” Moneyhub CEO Samantha Seaton, continuing:
“However, said many firms are not prepared for the amount of data required to be able to design and distribute the most suitable products and services for customers and to prove that they are doing so.
Without fully understanding the financial characteristics and objectives of their customers, firms could be at risk of recommending the wrong investments and products or failing to respond to changes in customers’ circumstances which might require them to offer alternative products and services to avoid foreseeable harm as a customers’ financial world evolves.”
Seaton added this is a particular risk for pensions firms who have “historically struggled to engage busy or disinterested consumers with what are often complicated products”.
