Consumer support – providing services in a way that meet clients’ needs – is the Consumer Duty outcome that advisers are finding most challenging six months on from the regulation taking force, that’s according to our new research from released today.

Of the Consumer Duty’s four outcomes, ‘consumer support’ (44%) ranked ahead of ‘consumer understanding’ (39%) – providing information in the right way, at the right time in a clear way, and demonstrating that clients are understanding – and ‘products and services’ (37%) – designing advice services to meet clients’ needs and ensuring appropriate targeting.

‘Price and value’ – ensuring clients receive fair value on the services provided to them – was the outcome where the fewest firms reported challenges demonstrating compliance (33%).

However, it was the area with the largest variation in responses from different parts of the advice sector. Directly authorised firms reported the most issues with price and value (46%) – significantly more than the average and more than twice as frequently as firms with restricted authorisation (22%).

No one size fits all

Alastair Black, Head of Savings Policy at abrdn, said: “While we may have expected to see one area of Consumer Duty stand out more as being an area of focus, our research shows that, on the whole, adviser firms are as likely to be working on any of the four outcomes.

“To me, this highlights the fact that every firm is dealing with a slightly different set of challenges. But it also indicates that there are many businesses that have developed a strategy for success.

“As Consumer Duty beds in, we may see the FCA pick out and share examples of best practice. Right now, there’s a clear opportunity for the industry – including advisers’ partners – to share learnings and successes themselves; to take hard-won solutions and match them to ongoing issues. Everyone’s likely to benefit from something.”

Priorities in supporting ongoing compliance

abrdn research also revealed the steps firms are prioritising to support their ongoing compliance.

Advisers are most focused on improving how they gather client feedback (19%), improving or introducing new systems to capture management information (MI) (18%) and reviewing customer communications (18%).

Just over one in six (17%) were also starting to use, or increasing the use of, an outsourced Managed Portfolio Service (MPS).

When asked further about what management information they were gathering, respondents most commonly cited data from staff surveys (20%), the outcomes of client reviews or the review of client files (19%) and identifying clients paying above-average charges (including ad-hoc charges) (19%).

Key takeaway

Alastair Black added: “A key takeaway from this research is that everyone is prioritising something to help maintain their compliance – the industry is, as expected, fully behind the FCA’s aim.

“And it’s encouraging to see such a focus from firms on using their management information as a tool to self-assess areas of risk and foreseeable harm, and to measure progress.

“Taking a detailed compliance approach to Consumer Duty – for example, using data to measure against the four outcomes, is important. But to really align with the spirit of the regulation, and to do so efficiently, firms should also be testing themselves against the big picture; the goal of delivering better outcomes for clients. Keeping this front of mind will help minimise the risk that progress towards this goal is smothered by the process.”