A new benchmark report by RegTech company Model Office has found that the average financial advice firm spends around 13 hours per week – equivalent to 27% of total working time – on compliance tasks.
The findings underscore the mounting regulatory burden faced by advisory businesses, particularly as they adapt to the Financial Conduct Authority’s (FCA) Consumer Duty requirements, claims Money Marketing.
The report, based on data from Model Office’s RegTech benchmarking platform and AI-driven heat-mapped dashboards, analysed responses from over 800 retail intermediary advice firms. It revealed that firms are spending between 7 and 18 hours weekly on governance, risk, and compliance activities. The direct and indirect costs of compliance have also risen sharply, now averaging 20% of annual revenue, depending on firm size – a figure that has increased from last year.
Model Office’s study highlighted that half of firms remain concerned about not receiving adequate outsourced compliance support in light of Consumer Duty obligations. A similar proportion expressed doubts about the robustness of their internal compliance processes. One in two firms also admitted that their compliance data is not easily accessible, with many citing poor data quality as a persistent issue. Only 33% said they could access quality compliance data instantly during audits.
The survey identified the biggest challenges facing firms in the next 12 months as meeting Consumer Duty standards, validating products and services to support good client outcomes, recruiting skilled staff, managing limited budgets, and keeping pace with regulatory change. Notably, artificial intelligence (AI) emerged as both an opportunity and a risk, with many compliance officers expressing cautious optimism about its potential to improve efficiency while noting the need for careful oversight.
Model Office said that firms using RegTech tools are already reducing their compliance costs and time by 25–30%, with potential savings reaching 50% when generative AI is deployed. The report not only explores areas of concern but also provides practical recommendations for managing governance, risk, and compliance in a more sustainable way.
Model Office founder and director Chris Davies said, “It is great to see advice firms testing and trialling RegTech and AI tools, particularly given the survey results show they are now spending over 60% of time on business and compliance activities rather than client meetings, compliance costs are up from last year, plus one in two unsure on data quality and access, all means they are up against it when it comes to ensuring evidencing compliance and sustainable business practice.”
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