This has translated into significant work being undertaken by all financial services providers to ensure consumers were at the very heart of the improvements, with changes spanning from marketing materials to product testing and data collection.
Jessica Franks, head of investment products at Octopus Investments, said Consumer Duty provided a "good opportunity" to reflect on the information clients and financial advisers needed, including assessing the way they preferred that information to be administered and whether the company's internal product governance met client expectations and needs.
Consumer Duty and what it could mean for asset managers
She said: "We were able to work with advisers to specifically focus on the specialist nature of some of our products. For example, how advisers can look to deliver value and good customer outcomes through undertaking holistic tax planning and considering tax-efficient investments for the right clients."
Franks noted Octopus conducted its own research prior to the regulation coming into force, which found that 54% of advisers found the ‘value for money' outcome as one of the biggest challenges in implementing the Duty's requirements.
However, financial advisers were not the only players in the industry struggling with the implementation of the Duty.
James Penny, CIO at TAM Asset Management, highlighted how discretionary fund managers had quite the task in preparing for the regulation, as they had to "justify ‘fair value' from within any model portfolio service offering".
This meant the DFM sector had to "take a step back" and take a hard look at its charging structure, he explained, to ensure their models were compliant or completely change them in order to meet the ‘fair value' requirements.
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Penny continued: "This is a challenge to some of the more archaic charging structures for strategies focusing overly on passive investing or low-touch active management. While the change might bring some industry disruption, it seeks to make the MPS market more appealing to the end investor and helps solidify the long-term role of the MPS model in the UK market."
Larger institutions have historically been able to "fall back" on their established brands, sizeable asset pool and distribution channels, he argued.
This led boutiques to having to become "more entrepreneurial and nimbler" to enrich the service delivered to the end investor. Yet, Penny said "bigger is not always better".
"Having unfettered access to the entire collective market allows portfolio construction to be tilted exclusively to ‘best in breed' strategies as opposed to in-house solutions or fettered ‘buy lists'," he said.
Penny also noted that providing clients a more personalised investment experience is "key", such as allowing face time with portfolio managers as opposed to waiting for a mass-produced investment circular.
"The essence of Consumer Duty is to draw attention to the notion that we, as an industry, need to constantly deliver improvements or enhancements to the service we provide to end investors. The key to retaining relevance is to embrace change and positively handle disruption," he said.
Afzal Amijee, commercial director at Broadridge Fund Communication Solutions, echoed Penny, noting that in the current backdrop of high inflation, higher interest rates, and high cost of living, retail investors are starting to "scrutinise [funds'] overall performance, costs and the opportunity costs".
Even though consumers are not aware of the Consumer Duty per se, he said that they are starting to consider the exact same outcomes the Duty sets out for financial services firms to achieve.
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"The retail consumers ought to be thinking about price, value, performance, and service, though they may not fully appreciate that this is precisely the focus of Consumer Duty regulation," he said.
"It will not be long before they start to see assessment of value disclosure documents next to fund factsheets, as platforms start disturbing these documents to retail consumers."
That is why asset managers and other product providers must ensure they are providing fair value, as Amijee highlighted how a large portion of retail investors have either considered or have already switched to ETFs and other passive options due to their low costs.
He noted Broadridge has seen net inflows of $66.2bn into European ETFs last year alone, compared to outflows of $233.2bn from European open-ended funds.
"Given the current economic climate, investors will search for value", he added, arguing that fund boards will need to justify the fees they charge against the performance and value being delivered.