69% of investment, wealth and pensions firms said that the new Consumer Duty rules would have a significant impact on their way of doing business
Despite this, half of the firms surveyed (51%) don’t currently have plans in place to become compliant before the deadline
One in ten senior decision makers within the investment, wealth and pensions industry do not know anything about incoming FCA consumer duty regulations despite the new deadline of July 2023
As the deadline for the FCA’s Consumer Duty regulations looms ever closer, concern amongst decision makers at investment, wealth and pension firms is growing, according to recent research from Moneyhub, the market-leading Open Data, Open Finance and payments platform.
With less than 9 months until the deadline for current products and services, one in ten (10%) senior decision makers (CEOs, Chairman and Directors) at investment firms, wealth managers and pension providers confessed to not knowing much about the upcoming regulations.
Two thirds (69%) of investment, wealth and pension firms said that the new regulations would have a significant impact on their way of doing business. However, concerningly, over half (51%) did not have plans in place to become compliant ahead of the original April 2023 deadline set by the FCA.
While the April deadline was pushed back to July in order to allow firms more time to implement their plans to become compliant, there is still a concern that many will not be ready. Especially so given the number without active plans in place, despite the FCA asking for boards to approve plans by October 2022.
The FCA’s overarching objective is to benefit both financial services providers and customers through greater degrees of understanding, knowledge, and transparency. Accordingly, financial services firms are to provide customer support that meets the needs of the consumer, enabling them to act in their interest without hindrance, fully understanding the benefits, and risks, of the products and services.
Investment, wealth and pension firms believe that technology will play a significant role in helping them become compliant. Half (51%) said they’d be investing in technology to develop and deliver more personalised and targeted communications, while 49% said they’d be investing in technology to access customer data and insights.
Data and insights are fundamental to firms' response to Consumer Duty. Open Finance data enables firms to identify their customers' needs, characteristics and objectives in sufficient granularity. They will also be able to identify foreseeable harm, and be able to offer targeted communications and support at point of sale and throughout a firm's relationship with its customers. All key components of the Consumer Duty regulations. Customer data, gained with consumer consent through Open Banking and Open Finance, provides firms with a holistic view of customers' financial lives.
Samantha Seaton, CEO of Moneyhub commented: “The FCA has said that Consumer Duty is a significant shift in what it expects of firms. The Consumer Duty will test just how customer focussed businesses truly are, however 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.
“Customer engagement is a key issue and also an opportunity for many firms, particularly pensions firms, who have historically struggled to engage busy or disinterested consumers with what are often complicated products. Offering personalised communications and relevant nudges will improve engagement and long-term savings, spending and investment habits can be transformed. This not only brings benefits to the consumer but the business itself.
“It is my hope that firms view Consumer Duty as a real opportunity to transform their business for the better.”
Contacts
Ingrid Anusic
Marketing Director, Moneyhub
ingrid.anusic@moneyhub.com
M: +44 783 722 6553
Eleanor Ross
Account Director, Teamspirit (Moneyhub PR Agency)
ERoss@teamspirit.uk.com
M: +44 7393 758 446
About Moneyhub
Moneyhub is a global ISO 27001 certified software developer of Open Banking, Open Finance, and Open Data applications. Its FCA-regulated Open Data platform enables companies to quickly and easily transform data into personalised digital experiences and initiate payments. Its APIs and fully customisable platform provide data aggregation, insights, notification nudges, and payment systems. As a result, clients have the consent-driven data and analytics they need to create super-personalised offers, products, and services. Hundreds of organisations, spanning finance to media and retail, rely on Moneyhub’s award-winning technology.
For more details, please visit www.moneyhub.com