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Consumer Duty: What Should You Be Doing Now?

In the latest of our series of posts on the Consumer Duty, we focus on the position firms should currently be in and how best to use the time remaining. At the time of writing, we are entering the final 30 days prior to the implementation date – 31 July 2023, so the clock is ticking.

Almost a year ago the FCA helpfully set out a defined implementation plan requiring firms to formalise their own plans before November 2022, complete open product reviews and value assessments by the end of April 2023, and then work on remedying any issues from May 2023 until the end of July 2023. Therefore, the obvious tasks which should be on our to-do list now are to remedy any harms which have been picked up by the open product review and amend the product where it has been identified that customers, or groups of customers, are not receiving good value. But, of course, there is more that firms should be doing.

Funeral Plan Providers: New FCA Regulations




Culture and Communication

The first, and most important, is communication. Communication and culture go hand in hand as you cannot hope to achieve your desired culture without first having communicated expectations to your team. The FCA has been clear throughout the whole journey of the Duty that it is designed to change the culture of firms – from profit centric, to customer-focused, thus removing practices which have led to poor outcomes such as mis-selling, reliance on bias/passiveness to drive price increases, or sludge practices which prevent customers accessing support. Now is the time to reflect on the way you have communicated the Duty to your team, whether to those in customer facing roles, back-office, or management. You can ask yourself:

  1. Has your firm clearly set out the purpose of the Duty to team members?

  2. Have you successfully relayed the cultural shift expected of the Duty explaining it is a step-change in regulatory compliance?

  3. Do team members have a clear view of the reviews and assessments required and the impact they have on your products and services?

  4. Are team members aware of the impact the Duty has on their role?

  5. How do you know?

Addressing the final point, we recommend you survey team members this month to get data on the level of understanding of the Duty within your business. This will help you to identify and address weaknesses. It is also excellent evidence to demonstrate your compliance.

Emily Shepperd, Chief Operating Officer and Executive Director of Authorisations at the FCA recently delivered a speech on culture expectations in firms which adds to our suggestions in this article.

Outcomes Monitoring

We’ve been helping a number of our clients throughout their implementation journey: we’ve completed the reviews, helped them to understand their target market’s characteristics and used this to identify harms. Of course, we’re helping them to mitigate the harms before the end of this month but we’re also ensuring they focus on building their monitoring framework and MI to enable them to properly monitor the outcomes their customers receive.

This varies greatly whether the firm is a distributor or manufacturer, but either way you are, to some extent, reliant on other firms in the distribution chain to share data. We recommend you engage with those firms now, if you haven’t already done so, to understand what MI is available. This, together with your own data, can build a suite of information to help give a picture of the outcomes that customers are receiving and any weaknesses you may have. This is a hugely important element of compliance with the Duty which has been, to date, overlooked by too many firms. PRIN 2A.9 requires firms to identify key measures [such as default rates, switching, complaints, queries, etc.] which can be used to measure whether customers are getting products which meet their needs and to do so on a regular basis, ensuring that root causes are identified, discussed and remedial action is taken. Building this MI and governance structure should be a priority at the moment.

Underpinning all of the above is a sound Consumer Duty Policy, Product Reviews and of course, Product Approval Process. To help, we have created a new, updated, product approval process and a new product review template. Both are now streamlined and come with guidance on how to complete.

We have also created a template Consumer Duty Policy. All of our new templates are available here.


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