Six in 10 financial advisers believe the Consumer Duty will increase the advice fees they charge and make the advice gap worse, according to a new survey.

The survey, of 267 advisers carried out in August, revealed a negative view of the Consumer Duty in terms of its impact on the adviser sector.

The FCA implemented the Consumer Duty in July with higher standards of consumer treatment.

The research suggests that 11% of advisers are considering quitting the profession or retiring due to the Consumer Duty which many believe could have more impact than the Retail Distribution Review.

Key findings from the survey by research firm CoreData showed:

• 46% think the Consumer Duty is an unnecessary burden that will do more harm than good
• 35% say the Consumer Duty will see more advisers leave the industry than under RDR
• 11% of advisers are considering leaving the industry or retiring due to the Consumer Duty
• 35% of advisers say regulations are negatively impacting their mental health

A CoreData study shows that nearly a quarter (23%) of advisers think the Consumer Duty, which requires firms to deliver good outcomes for retail customers at all stages of the consumer 'journey', will "reshape" the financial advice industry more than RDR.

But almost half (46%) think the new regulation, which came into force on 31 July, is an “unnecessary burden” for advisers and will do “more harm than good.” Less than one in five (18%) disagree.

Advisers point to the Consumer Duty (22%) and volatile markets (23%) as the biggest challenges facing their businesses over the next 12 months.

Interest rates rises (17%), inflation (13%) and the cost-of-living crisis (8%) are seen as lesser challenges.

The cost of complying with the Consumer Duty is a key concern. More than seven in 10 (72%) advisers say the regulation will increase their business costs. And almost three in 10 (28%) say their firm has had to outsource parts of Consumer Duty regulatory compliance.

Amid expectations of higher business costs, advisers think the Consumer Duty will make advice more inaccessible.

Six in 10 (60%) say the regulation will increase advice fees and widen the advice gap. And three-quarters (75%) think it will make it harder for their firm to serve lower value clients.

More advisers focused on mass market clients think the Consumer Duty will expand the advice gap (64%) and make it more difficult to serve less wealthy clients (82%).

Nearly two-thirds of advisers (63%) say regulations are impacting their ability to do their job. And over a third (35%) say regulations are negatively impacting their mental health. This increases to more than half (52%) of mass affluent advisers.

Andrew Inwood, founder and principal of CoreData said: “Our study shows the regulatory burden is exacting a heavy toll on both advice businesses and advisers’ mental health.

“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.”