Will the Consumer Duty make your CIP obsolete?

Views & insights

The Financial Conduct Authority (FCA) has announced a three-month extension to the implementation of the new Consumer Duty.


7 December 2022 | 3 minute read

The Financial Conduct Authority (FCA) has announced a three-month extension to the implementation of the new Consumer Duty. But with less than a year to go until the rules come into effect, time is running out for advisers to make sure their investment processes are compliant, fit for purpose and manageable.

The Consumer Duty is now due to come into effect in July 2023 and is expected to lead to increased regulatory scrutiny of advisers’ investment propositions and advice processes. With failure to comply carrying the risk of enforcement action, this is not the time for advisers to be resting on their laurels.

Target markets

One of the Consumer Duty’s four customer outcomes is that products and services are fit for purpose. In other words, they must be designed to meet the relevant customers’ needs and targeted at those customers. 

This requirement builds on the PROD rules around ensuring products meet the needs of specific target markets. It is a requirement that advisers have already been trying to meet by providing investment solutions through a centralised investment proposition (CIP) or a centralised retirement proposition (CRP). Both CIPs and CRPs are designed to help advisers deliver consistent and repeatable investment advice to clients, while also bringing economies of scale. 

Given these benefits, it is no surprise that 88% of advice firms run a CIP, according to research by financial services consultancy the lang cat . However, running a CIP or a CRP in-house also comes with its risks – and those risks have risen as the regulatory burden mounts and the market backdrop becomes more challenging.

CIP burdens

Running a CIP or CRP is becoming increasingly complicated and time consuming for firms who manage their portfolios on an advisory basis, especially for those who are expanding their client base. 

The more clients who are added to the CIP, the more laborious it is to collect individual investor permissions every time a trade or portfolio rebalance is required. This is especially difficult in a volatile market environment when portfolios may need to be rebalanced more frequently. It also means that advisers are running “models” that are increasingly out of sync, especially where they are implementing changes upon receipt of investor permissions.

Regulation is also adding to the burden. Under MiFID II, advisers must meet stringent requirements around assessing suitability, and provide a personalised cost and charges disclosure before and after each portfolio change. The Consumer Duty is likely to increase pressures further as firms will need to provide additional evidence showing how their CIP or CRP segments clients to meet their different needs and objectives. This won’t be a one-off exercise – firms will need to be able to prove on an ongoing basis that their product recommendations are fit for purpose and in line with clients’ needs.


Advisers are currently spending an average of 71 days a year running their CIP, according to the lang cat. That’s 71 days which could otherwise be spent on providing financial planning advice to new and existing clients. It seems almost inevitable that this figure will increase when the Consumer Duty comes into effect, which could have significant cost implications for advisers.

One way to reduce the burden of managing a CIP or a CRP is to outsource the responsibility for creating and managing investment portfolios to a discretionary fund manager (DFM). DFMs have discretionary permissions, so they can adjust portfolios as and when required without needing to seek authorisation from each client. They can react swiftly during times of market turmoil, and ensure portfolios retain the correct balance between risk and reward. 

The decision to outsource isn’t one to be taken lightly. Advisers need to feel confident the DFM they are partnering with has a rigorous and consistent investment process and has the necessary expertise to deliver the best investment opportunities for clients. 

At RBC Brewin Dolphin, our in-house research team is the driving force behind our investment process. Our research team’s insights translate into powerful recommendations that enable us to respond quickly and decisively to market events. This means that you can concentrate on giving the best advice, safe in the knowledge your clients’ money is being invested in a way that suits their needs, both now and in the future.

The value of investments, and any income from them, can fall and you may get back less than you invested. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Opinions expressed in this publication are not necessarily the views held throughout RBC Brewin Dolphin.

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