Technology must be front and centre to deliver Consumer Duty


Consumer Duty clearly is a game changer for the financial services industry and will demand a dynamic shift from firms to deliver, demonstrate and prove truly positive customer outcomes. Any organisation suggesting differently or not taking it seriously risks being left behind and a failure to comply could have serious consequences.

Effective compliance will result in the generation of significantly more data for companies, and particularly in the financial advisory space. This must be addressed robustly, analysed and reported appropriately and comprehensively. While the collection and demonstration of data is not a new requirement, the expectations and obligations outlined in Consumer Duty demand better evidence, i.e. that data must be prioritised or put first. The regulatory narrative and direction from the FCA is shifting to a “show me” rather than “tell me” position, which means that firms must have the ability to meaningfully demonstrate the data evidence.  For the majority in the financial advice market that will mean a clear and structured plan to introduce or enhance technology deployment: that will be the key differentiator between success and failure.

The regulatory narrative and direction from the FCA is shifting to a “show me” rather than “tell me” position

However, that is where the challenge also lies. The financial advice industry has remained relatively static since the turn of the last decade, but it is now entering a period where it will be fundamentally disrupted over the coming decade. The industry has relied on historically high margins, slowing down change and, critically for this regulation, is a laggard in terms of the adoption of digital technologies. There have only been incremental improvements to client reporting systems, digital planning tools, platforms, CRM systems, and digitising fact-finding processes, for example.

Margins are now being compressed – a 10 per cent decline since the Global Financial Crisis according to PWC 1 – and new technologies will drive changes across all facets of the industry. The trend towards Private Equity-backed adviser consolidation and vertical integration, to enable the capture of more fees across the value chain, does not resolve the structural inefficiencies and lack of scalability inherent in wealth management businesses. This has diverted focus from the real issue and the next major challenge for the industry: operational efficiency and the provision of high-quality service to the masses in the post-pandemic 21st century.

The pandemic brought forward the use of digital infrastructure by a decade. The widespread adoption of video conferencing (VC) has fundamentally transformed the way advisers can serve clients. Advice firms have reported (via Aveni’s internal research) that pre-pandemic, over 90 per cent of their business was done face to face and 10 per cent over VC/Phone, now some advisers report that 80 per cent of advice is delivered via VC. This new normal is driven by client demand. There is a clear trend emerging for introductory meetings (fact find, presentations) to be done in person and ongoing service to be done via VC. Regional advisers can now market as national advisers. This presents a significant, untapped opportunity for Financial Advisers.

Capturing the data in a client meeting through recording, can be used to power a new era of automation and introduce data-driven technologies that have been previously unreachable for financial advice. A client meeting contains the data that drives post-meeting processes, from administration, to compliance testing, adviser competency, and suitability. Models can be trained to replicate these processes and effectively remove all low value administration, allowing Financial Advisers to focus on what both they and the client value, building great relationships and      guiding clients through their financial futures.

The key operating model challenge is consistent data collection. If data capture processes are centralised and consistent, a significant amount of activity across the advice process can be automated. This poses an interesting challenge for the partnership model. Partnerships have typically struggled in establishing consistent processes across partner firms often resulting in differing standards in data capture and consistency. The adoption of data driven technology will start to drive a wedge between the two models in terms of cost to serve and operational efficiency.

Machine learning will fundamentally transform human centred advice, automating the inputs and outputs of each step of the advice journey, allowing humans to focus on their strengths; being human and building relationships. Data driven automation will allow scale that is out of reach to incumbent operating models, with advisers able to deliver improved service to significantly more clients at the same time as materially reducing the administrative burden with each advice case. Those who adopt an operating model designed for the consumption and processing of data will have a significant advantage. Light weight, cloud-based hybrid advice that consistently captures data at every stage of the process, has clear automated journeys through digital only, video conferencing and face to face. All of this, powered by technologies like machine learning and natural language processing will drive significant scalability into the advice process.

Consumer Duty regulation is a very deliberate and clear move to improve outcomes for customers, particularly those who are vulnerable, and to minimise risk. But it also brings the opportunity to enhance and promote good business management and ultimately deliver positive bottom-line impacts for firms. This investment in the right type of technology and resource has to be viewed beyond a compliance cost; this is the chance to think about more effective competition for better consumer outcomes facilitated by better data insights to enhance communications, engagement and ultimately profit.

We know that firms are collecting data but without proper analysis and process in place, that can be pretty meaningless. Projects are underway across many businesses to define outcomes, demonstrate good value and identify potential causes of harm. There are questions that firms need to be asking themselves to ensure that they are moving to a genuine data-first position:

  • How are we collecting data?
  • What kind of data are we collecting?
  • How are we analysing it?
  • What are we doing with the outcome and insights from the data we collect?

There must be a more robust approach to the use of technology as a proactive defence against risk and compliance failure. But it also presents an excellent route to greater customer insight, capability, communication and ultimately conversion. Those firms who move quickly will be at a significant advantage, but time is clearly of the essence.

Consumer Duty is here now, and the October 2022 deadline for implementation plans is looming – fast. This regulation presents a crossroads for the industry and there is an opportunity to be left behind if it is not taken seriously enough with the right investment and focus on technology for the ultimate level of compliance.



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Joseph Twigg is CEO of Aveni. They describe themselves as a passionate team of computer scientists, engineers, designers and creatives. They want to transform the Financial Services industry by fusing AI with human interaction. With this approach, they can enhance risk monitoring, transform understanding of customers and agents, better manage staff performance, automate, drive down the cost to serve and so more

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