A study by research firm CoreData has revealed that more than one-in-10 advisers (11%) are planning to leave the industry or are retiring due to the introduction of the Consumer Duty.
More than a third (35%) said that the new rules will result in more advisers leaving the sector than when the Retail Distribution Review (RDR) was introduced.
The study also found that nearly a quarter (23%) of advisers think that the Consumer Duty will reshape the financial advice industry more than RDR has.
Almost half (46%) said that the new regulation is an unnecessary burden for advisers and will do more harm than good. Less than one-in-five (18%) disagree. Some 72% of advisers said that the regulation will increase their business costs, as 28% said that their firm has had to outsource parts of Consumer Duty regulatory compliance.
Advisers also expressed the view that the Consumer Duty will make advice more inaccessible. Some 60% said that the regulation will increase advice fees and widen the advice gap. Respondents pointed to Consumer Duty (22%) and volatile markets (23%) as the biggest challenges facing their businesses over the next 12 months.
The research also found that regulatory pressures are affecting advisers’ mental health and job performance. Nearly two-thirds (63%) said that regulations are impacting their ability to do their job. Over a third (35%) said that regulations are negatively impacting their mental health.
“Our study shows that the regulatory burden is exacting a heavy toll on both advice businesses and advisers’ mental health,” said Andrew Inwood, founder and principal of CoreData.
“It is also concerning that advisers expect a regulatory-fuelled expansion of the advice gap. Rules should be geared towards making advice more, rather than less, accessible and helping advisers serve less-wealthy clients.”
