Wealth managers struggle with FCA compliance as deadline looms

A number of wealth managers and financial advisors are worried about meeting the report deadline of the Financial Conduct Authority’s (FCA) Consumer Duty regulations, according to research.

According to the research by Ortec Finance, a provider of risk and return management solutions headquartered in Rotterdam, which included UK wealth managers and financial advisors, 8% of respondents fear their company will not meet the July 31, 2024 deadline.

Regulation: Coming to Europe soon?

In addition to these compliance challenges, the study also found that wealth managers and financial advisors expect an increase in industry fines for non-compliance over the next three years. 78% of those surveyed anticipate higher fines, while 74% foresee increased investment in technology to help address regulatory demands. About 35% said they expect a dramatic increase in technology investment. The main reasons for this investment are to deliver better client service, understand a wider range of asset classes, improve investment advice, and reduce costs.

FCA Consumer Duty: What UK firms need to know

The primary reasons include an inability to provide sufficient evidence of board engagement with Consumer Duty and incomplete reviews of their approach to vulnerable customers, including assessing whether customer support meets these clients’ needs. Other reasons cited include inadequate reviews of internal governance processes and policies, incomplete staff training and insufficient evidence of identifying potential consumer harm.

Tessa Kuijl, MD, global wealth solutions at Ortec Finance, commented: “As wealth managers and advisors foresee a rise in fines due to heightened compliance, many are turning to technology to better navigate these regulatory requirements. Investing in the right tools and systems is crucial for protecting the firms and their clients.”

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