Consumer Duty is having a major influence on advice practice, according to data published by The Lang Cat.

Research by the financial services consultancy found that 72 per cent of managed portfolio service (MPS) due diligence exercises had ranked 'target market' as the most crucial factor for MPS selection in 2024.

Data from The Lang Cat’s Analyser MPS software, which assesses all MPS due diligence reports from the past 12 months, showed that advisers do not select primarily on cost.

Fees were a vital aspect to assess in CIP spell out CIP selection, The Lang Cat said, although the real-world user data showed that product design and client suitability are front and centre – with suitability factors occupying seven of the top 10 most important selection criteria.

The Lang Cat said this suggests that Consumer Duty is having a “considerable influence” on adviser practice.

It matches up with The Lang Cat’s experience of working with advice firms, where it said there is recognition that Consumer Duty has “moved the dial” on what it takes to perform compliant and thorough product due diligence.

“Our Analyser methodology has always been built around a client needs first philosophy and Consumer Duty brought a whole new dimension to the importance of that,” The Lang Cat digital director, Terry Huddart, commented.

“There’s an open debate around whether the MPS sector has become commoditised on cost and performance, but this not what we are seeing. It’s natural to think that, with so many to choose from, cost and performance would be the path of least resistance.

“It’s great to see that advisers are thinking beyond just those aspects and focusing on the vital factors of their own firm’s investment philosophy and target client definitions.”

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