After coming into effect on July 31 this year, the Consumer Duty regulation is still being regularly debated within the financial industry in the UK.
In a recent video by Kidbrooke, the company outlined how companies can bridge the current gaps that exist within Consumer Duty.
The presenter – Kidbrooke partner Erik Brodin – highlighted that he believes Consumer Duty will potentially change the current way of working.
He explained, “The reason for that is, from a regulatory point of view, it puts more demand on the education of customers and the understanding of customers. Is the product the right fit? Is it fair?”
Brodin highlighted that Deloitte pointed out in a recent whitepaper that in this area, technology is key. “If one has manual support centers, it would be very hard to make the aim of this cost-efficient,” said Brodin.
He also pointed out that while the legislation was formulated in the UK market, regardless of jurisdiction Consumer Duty will have a considerable impact on companies who operate in the UK.
The area that Kidbrooke will engage with the Consumer Duty legislation, Brodin stated, is on engaging in the relationship with the end customers. This, he said, starts at the onboarding stage – with customers needing to be informed and educated on the financial products they seek to engage with.
Brodin also used the time to discuss the role of orphans – financial customers without an advisor – and how they can still be supported by platforms without being regulated by an advisor.
In the view of Brodin, the orphan problem has not yet been resolved. He said, “It is something well-known within the industry that we have tried to investigate. It is a complex issue, and is complex for the corporations.
“The view of orphans is that they are not high on revenues and is low-business priority, there is uncertainty around the definition as well as having regulatory uncertainty.”
Brodin also mentioned that supporting orphans may lead to friction with distribution partners such as IFAs. Furthermore, the issue is well known and hence involves a high amount of stakeholders.
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