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How will you remember 2023?

7 min read
20 Dec 2023

If only there was a crystal ball to find out what the future holds, we could be more certain if there is reason for nostalgia or relief as we leave 2023. After bank failures, submersible implosions, earthquakes and storms, new AI trends or geopolitical conflicts… 2023 is certainly one to remember.

This year saw the publication of a piece of regulation that most advisers would consider the most significant regulatory change in their careers. A 12-month implementation deadline and an extremely large scope have made the Consumer Duty a challenge for firms of all shapes and sizes to embed.

The Financial Conduct Authority’s (FCA’s) decision to launch Consumer Duty has been in part driven by the regulator’s need to understand how pension freedoms has been faring in the market since it was launched in 2015.

Eight years on, having implemented the Duty means much greater focus on the outcomes your clients receive and the value they derive from your services.1 In addition to this, there were the obligations to identify your target market, clients in similar cohorts and to begin testing your communications amongst many other requirements.

The effects of the Duty are already being felt across the financial services sector, with changes to cash deposit rates, fee structures and swift intervention in some corners of the market.

Improving the journey

Regulation is becoming increasingly demanding of advisers’ time and resources, which is why 7IM has invested heavily into developing and improving the 7IM Platform throughout this year. During 2023 we’ve focused on enhancing numerous corners of the platform to help advisers navigate the different types of uncertainty.

We’ve delivered enhancements focused largely on efficiency and innovation, conscious of the importance of the journey. It’s our platform’s mandate to enable you to understand the client’s journey so you can communicate it with them in the best possible way. Our platform enhancements this year include:

  • Our award-winning Retirement Income Solution (RIS) functionality: we’ve built an integrated modelling journey for existing platform clients, enabling client and account data to be automatically sent to the RIS portal
  • The RIS review journey: we’ve further automated and digitised this section so account data can be sent automatically to the RIS portal to provide an integrated review process
  • The platform RIS dashboard: we’ve enhanced it to allow a review to be triggered, display and edit review dates, review statuses and a control report to highlight any overdue RIS plans.

These enhancements have been made since we introduced RIS into the 7IM Platform at the beginning of 2023. Here are some of the features at launch:

  • It allows advisers to model clients’ income sustainability
  • RIS provides a robust and repeatable process to manage clients’ income
  • It is a ready-made CRP which offers 7IM, EQ and Brewin Dolphin investment options
  • This innovative product can be used with our full suite of retirement offerings to provide all the income and flexible income options required.

But we have enhanced the user journey far beyond the domain of RIS. We have improved the user experience throughout 2023 by making some changes with a significant impact on how you use the platform, covering navigation, improvements to the onboarding journey, as well as client and adviser reporting, which includes enhancements to the 7IMagine app.

Turning to data

But the Consumer Duty wasn’t the only regulatory workstream for some firms. Many will have also been chosen to participate in the FCA’s Retirement Income Advice Review, a data request that ran to 40 pages and contained 87 detailed questions on how firms were providing retirement advice to clients.

The spectre of the Duty was evident throughout the request, with a focus on client outcomes and charging structures. The depth of data required for this review also highlighted the regulatory focus on data and how the FCA is now a ‘data-led’ regulator.

Firms without well-structured and accessible client data will have found the requirements of the survey a challenge. The review has now concluded, and the results are expected to be published in Q1 2024.

A transparent, data-led platform

We’re conscious it is always easier for an adviser to communicate a message that is backed by data and transparency. This is why we’ve been focusing on delivering a platform that communicates the user’s journey and ambitions through the data.

This year, for instance, we’ve increased the fee visibility functionality, providing you with greater clarity on fee data.

In the second quarter of 2023, we completed an 18-month project consisting of delivering enhanced functionality for users of DFM models on our platform to strengthen the range of tools and reporting available to users using DFM models.

The work included capturing a DFM client authority online, linking a portfolio to a model without a rebalance, displaying model names in the Dealing and Order History screens, including DFM model names in client reporting, and additional practice level reporting.

And because we know our integration work is important for advisers to communicate the big picture to clients, in December we’ve been working on introducing the ability within the RIS modelling tool to determine how a guaranteed income may impact the customer outcome. To make this happen, we’re making the following enhancements:

  • A new function for where clients are between 60 and 85 and are proposing to draw down from the SIPP
  • The Secure Lifetime Income (SLI) purchase amount will be captured by the adviser, and we then run an SLI quote based on using an average health, non-smoker persona and use the current rates
  • Create a new scenario so the adviser can compare more than one scenario side by side on the one screen, providing you with the ability to share different options with your customer.

Keeping a close eye

The regulatory landscape in 2024 will continue to evolve at pace, as there have been no indications of a slowdown. Recent 'Dear CEO' letters targeting our sector underscore the regulator's firm stance on various issues such as financial crime, transfer times, operational resilience, client assets, and diversity and inclusion.

The focus on transfer times relates to the FCA’s concerns around consumers losing time out of the market while investments are moved across platforms. At 7IM, we’ve listened to the industry and have responded by taking firm action.

The STAR initiative was created to improve the customer experience of transferring pensions, savings and investments between companies, by setting and measuring against a good practice framework. This initiative is heavily supported by the FCA.

We have worked alongside the industry in defining end-to-end processes, setting good practice standards and measuring accreditation performance.

STAR annual accreditations are based on performance against transfer standards annually. Awards are thoroughly checked within the accreditation committee before they are given to an organisation. Accreditations are measured on a range of key performance indicators on overall transfer time, and they consider several mitigating factors on the overall performance of an organisation.

  • 7IM has always prided itself on improving its transfers to deliver the best possible client outcomes
  • Since 2019, we have supported STAR’s incentive to shape recognised, industry-wide standards to promote good practice in transfers and we have representatives in both implementation and steering groups
  • In March 2023, we were one of only two firms to receive a gold award for personal pension, SIPP and SSAS from STAR.

Additionally, findings from the Retirement Income Review, the Advice/Guidance Boundary Review, new Sustainability Disclosures, and new capital requirements for Personal Investment firms suggest that the regulatory environment will remain equally dynamic throughout 2024 and beyond.

Brace yourselves for another year of significant activity on your regulatory change agenda.

At 7IM, we have never been so optimistic about the future. We’re encouraged by the support and investment from Ontario Teachers’ Pension Plan Board (OTPP), which have acquired a majority stake in our company in 2023. That’s how we’ll remember this year: we’ve solidified what has been working well, and have intensified our efforts on what we thought could work better.

We can’t wait to continue working with our advisers and shape the path of the retirement journey across the industry, so that our collaboration enable our clients to achieve the best possible outcomes.

Thank you for your support. We look forward to continuing working with you.

The past performance of investments is not a guide to future performance. The value of investments can go down as well as up and you may get back less than you originally invested. Any reference to specific instruments within this article does not constitute an investment recommendation.

1 An overview of how 7IM have implemented the Duty can be found here: Consumer Duty - Information for distributors of 7IM Products and Services.

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