Kadra Adan: Use technology to meet Consumer Duty challenges, not a compliance team

Most adviser firms treat the Consumer Duty like it’s a compliance challenge. Little do they realise, it’s actually a challenge for technology.

Being a regulated requirement, it’s understandable why adviser firms often decide that their in-house compliance team, or an outsourced compliance professional, is the answer to making sure they are compliant with the Consumer Duty. There is, however, another – often cheaper – way forward: technology.

The Consumer Duty requires firms to evidence that they are proactively delivering good outcomes to customers. In practice, this means they’re being recommended the right products and services, that those products and services offer fair value, and that they are communicating with their customers clearly.

Fundamentally, that’s a data and workflow problem.

The question of a whether client’s portfolio is still suitable for their circumstances, if their annual review happened on time and if someone documented the rationale are process questions – and process questions are exactly what technology is designed to answer.

Outsourcing the answer to a compliance team, however capable, means relying on people to organise and evidence, and that creates the potential for human error.

Technology providers focus on selling platform features rather than solving compliance infrastructure problems

The FCA is now actively supervising the Consumer Duty and firms that assumed a paper-based evidence process in 2023 was sufficient are going to find themselves scrambling if the regulator comes knocking.

In fact, it’s already happening. The regulator has run multi-firm reviews examining whether they are delivering in this area, and the findings have prompted some firms to make significant financial provisions.

In my experience working with adviser firms and wealth managers, it’s not uncommon to find Consumer Duty-related records being maintained in Excel spreadsheets, or client data being manually re-entered across multiple disconnected systems to keep records up to date.

In one case, a firm’s biggest concern when discussing a move to digital document management was whether they could continue sending their annual client reports as printed letters; the compliance infrastructure question was almost an afterthought. The technology to solve these problems exists. The cultural shift to prioritise it is still catching up.

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To be clear, I don’t think this is a case of firms being careless or lazy with their data. I think they’ve simply been approaching the challenge the wrong way.

Structured digital annual review workflows, timestamped suitability assessments and automated evidence packs built into the client journey itself already exist.

The problem is that technology providers focus on selling platform features rather than solving compliance infrastructure problems, yet these problems are exactly those that cost firms the most time and money.

So, how should adviser firms be thinking about this? And what can they do to ensure they have the optimum processes in place to make their lives easier?

Firms with a timestamped, system-generated audit trail will have a significantly easier conversation with the regulator

The first step is ensuring their technology provider(s) solutions answer the following question: does the workflow I use for suitability and annual reviews generate a Consumer Duty evidence trail automatically, or does someone have to build that manually afterwards? If the answer is the latter, it warrants thinking about whether action should be taken.

The FCA is not going to prescribe exactly how firms must evidence their obligations, but firms with a timestamped, system-generated audit trail will have a significantly easier conversation with the regulator than those presenting a spreadsheet and a folder.

There is also a couple of longer-term arguments for a technology-led solution. Firstly, firms that are spending money on compliance consultants to tell them what to document are effectively paying for advice that their technology provider should be making unnecessary.

Adviser firms could soon face fee-related challenges thanks to the introduction of the targeted support regime and the potential scrapping of the mandated annual review. It therefore seems illogical to spend money on a service that technology can automate.

It becomes increasingly clear that technology makes people better at meeting regulatory demands

Thinking further into the future, if an adviser hopes to one day sell their business to a consolidator, the quality of evidenced Consumer Duty data will become very important.

Consolidators will be more reluctant buy a firm with a more basic or paper-based process because it carries additional risk and it may be harder to integrate with their system. By comparison, using technology to evidence the Consumer Duty helps to future-proof a business, handling problems before they even surface.

At first glance, the Consumer Duty feels like a challenge for a compliance team simply because it’s a regulation-based requirement. When we pause to think about how to best meet this challenge, however, it becomes increasingly clear that technology makes people better at meeting regulatory demands.

In 2026, the FCA is starting to take a close look at the action firms are taking the meet the regulatory requirements. Advisers, therefore, should think about this sooner rather than later.

Kadra Adan is head of UK product at Dorsum