We are now just 5 months away from the implementation of one of the biggest changes to the regulatory landscape. Firms are under pressure to ensure that they are keeping up with their implementation plans.
Last month, the FCA published important feedback on its findings of how well firms are preparing for the Consumer Duty. This feedback gave valuable insight into some of the pitfalls which firms should avoid.
Under the Consumer Duty, firms must be able to demonstrate a customer centric culture. The Consumer Duty places a necessity for firms to document their processes and show how they ensure positive consumer outcomes.
In our experience, most firms have a consumer centric culture, often building trust and reputation with customers. One of the key challenges in preparing for the Consumer Duty is learning to document firm culture.
So, how can firms ensure they can demonstrate a consumer centric culture?
Record keeping
As the phrase goes, ‘if you didn’t write it down, did it happen?’ Firms should record their decision making processes, especially those surrounding governance and product oversight, showing that they have considered potential risks to consumers and how these might be mitigated.
Monitoring
Scrutinise your current data and management information – what does this tell you now? Will this be sufficient to monitor and demonstrate compliance with Consumer Duty? Systems changes to collect more, or different data can take time so it is critical that these systems changes are not left until the last minute.
Positive regulatory engagement
Firms should make sure they are prioritising appropriately, making Consumer Duty a standing agenda item in management and board meetings and ensuring they are scrutinising their approach to the Consumer duty on an ongoing basis. Firms should show that they ensure that they submit information to regulator in a timely manner and are open and honest with the FCA. Firms could also demonstrate their positive regulatory engagement through demonstrating that they are keeping up to date with regulatory developments via training and regulatory newsletters, portfolio letters and ‘Dear CEO’ letters.
Consumer Outcomes
Firms must ensure you are focusing on the four Consumer Duty outcomes and are putting in the appropriate resource to make any necessary changes to their products, communications, systems and processes.
The Consumer Duty must be fully implemented within firms before 31st of July 2023. Firms must ensure that they are considering the intended outcomes of the Consumer Duty fully when implementing the changes being brought in.
We have been working with firms to assist with their implementation of the Consumer Duty. You can read previous publications we have produced on the Consumer Duty here.