The regulations, which come into force from July this year, aim to create a higher level of protection for customers of financial services companies.
The plans will be introduced as a result of instances seen by the FCA of consumer harm, including firms providing misleading information to consumers.
However, a third of advisers have said they are not confident that they are ready for the implementation of the regulations, and there is uncertainty over how well the duty will be policed by the regulator.
Philip Dragoumis, director at Thera Wealth management, said the regulations are going to be “difficult” to enforce.
For too long advisers have been 'selling' products that meet their needs and not those of the clientCraig Fish, Lodestone Mortgages & Protection
“The FCA has plenty of resource constraints such as staffing levels but also it's not clearcut what is a clear breach of the rules and what isn't,” he said.
“Detecting non-compliance will be difficult.”
Sheldon Mills, executive director of consumers and competition at the FCA, recently said that the regulator's supervisory and enforcement approach will be proportionate to the harm, or risk of harm, to consumers, with "a sharp focus on outcomes".
He added: "We will prioritise the most serious breaches and act swiftly and assertively where we find evidence of harm or risk of harm to consumers. In some cases, firms can expect us to take robust action, such as interventions or investigations, along with possible disciplinary sanctions.”
Timeframe differences
Advisers differed on the length of time they think it will take the FCA to work with firms to manage enforcement of the regulation.
Dragoumis said there will most likely be an informal grace period where the regulator “learns and adapts”.
“We will have a better picture next year.”
Luke Thompson, director at PAB Wealth Management, said it would be shorter, and less forgiving, with enforcement being heavily policed within six months of the rules coming into force.
“I would like to think that the FCA will make a real attempt to police the consumer duty and hopefully by doing so they will be able to tackle firms who are not adhering to the rules,” he said.
“As with any big changes, I believe there needs to be a period of working together with firms to ensure that customers are receiving the right outcomes.
“Hopefully the FCA will regulate and enforce consumer duty from very early on as I believe that it can have a real positive benefit in the long term for customers and advisers.”
