Spending on new technology is the biggest driver of increased investment by adviser firms ahead of the implementation of Consumer Duty, new research from SIPP provider iPensions Group has indicated.

The Financial Conduct Authority (FCA) will introduce its Consumer Duty rules from 31 July 2023.

According to iPensions Group’s findings, which was based on a survey of 100 advisers focused on pensions, more than three in four firms (76%) have seen their costs rise as they prepare for the new rules, which aim to increase consumer protection and promote fair practices across the financial services market.

The increased investment in their businesses comes from a combination of one-off and ongoing costs, with 69% of respondents estimating they are facing one-off costs, while 72% said the rise in costs will be permanent. Just one in six (16%) said that preparing for the implementation of Consumer Duty has had no impact on their cost base while 8% were unclear on the financial impact on their businesses.

Investment in technology has had the biggest impact on costs. iPensions Group found that 67% of its study’s advisers highlighted spending on technology while more than half (55%) said they had spent on improving their existing data. Just over one in three (34%) revealed they have invested in recruiting staff while 38% have spent on segmenting customer databases.

The study also indicated there are some concerns that partner firms are not as well advanced in preparing for Consumer Duty – with around 38% suggesting they are concerned about the issue. However, 59% also stated they are confident that partners are well prepared for the July deadline.

iPensions Group managing director, Craig Cheyne, said: “Our study shows that adviser firms have invested heavily in preparation for Consumer Duty underlining the commitment to its success from the industry.

“Clients are demanding increased use of technology and that is reflected in the study which shows that is the area which firms are addressing ahead of improvements to data.

“We are focused on delivering transparent service in a timely manner and have been investing in innovative technology to meet the demand from advisers and their clients.”

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