Legacy Products and Upcoming Deadline

Following my recent communication on “Making Time for Lifestyle,” I was pleased to receive a number of inquiries regarding the process of selling a portion of an IFA business. Our firm specialises in such transactions, and we welcome any questions you may have.

This brings me on to something connected, and I would like to remind you of important date that is fast approaching: July 31, 2024. This marks the full implementation of the Consumer Duty by the Financial Conduct Authority (FCA).

As you will recall, the FCA granted an additional year for firms to address their closed book business, which includes insurance and investment policies no longer open to new business.

Most Independent Financial Advisors (IFAs), particularly those with a long history, have closed book or legacy products on their books. These policies, though often resource-intensive and of limited value, still require administration and must comply with the Consumer Duty.

Research by Abrdn, as reported in FT Advisor, indicates that almost one-third of advisers plan to engage directly with the providers of these closed products to mitigate foreseeable harm, aligning with one of the consumer duty objectives.

The survey also revealed that nearly 90% of advisers have clients with legacy products, yet only 13% are satisfied with the outcomes provided by these product providers.

On May 16, 2024, Sheldon Mills of the FCA issued a “Dear CEO” letter specifically addressing closed products. It emphasised the necessity for firms to review these products and services against all aspects of the Consumer Duty before the July 31, 2024, deadline and continuously thereafter. Boards must ensure their firms are adequately prepared for this deadline.

Action Required

If not already done so, I recommend you engage with the providers of these legacy products to formulate your plans. Alternatively, our firm is ready to assist you in several ways:

Review and Consultation: We can help assess your legacy products, considering their purpose, size, and composition to determine the best course of action.

Exit Strategy: If you decide that administering these products under the new Consumer Duty is not viable, we can identify suitable buyers and facilitate a profitable exit for these accounts.

Please feel free to reach out to us for further assistance or to discuss your specific needs. As always, any first consultation  meeting is always at our expense