Consumer Duty: time to act
Whatever you think of the FCA's approach on Consumer Duty, the message now is: just get on with it.
The clock is ticking on the FCA's 'cornerstone' project. The FCA have stated it will be “issuing a survey to over 600 mostly small and medium-sized firms [on] implementing the Duty”. How will you respond if one of these firms?
At a high level, the Consumer Duty is simple. Are you creating/selling someone the right product or service, which is easily understandable with suitable customer service, and at the right price or value?
But key now is that the FCA will not settle for “we always do right by our customers” if there is no evidence to back this up. If you are not testing consumer outcomes, in multiple ways, looking at each step of the consumer journey (relevant to your business model), and documenting this for Board review (and hopefully, approval), then you are failing to deliver the Consumer Duty. Simple.
Unlike previous rule changes, arguably, there is no quick fix; no template policy; no magic bullet.
The FCA seem to be following the old proverb: Trust, but verify. If you cannot evidence/demonstrate (i.e. with MI/testing) how you verified good outcomes are being delivered, and have consumers at the heart of your business model, you might find the FCA lose trust in you.
It is clear the FCA are concerned that firms are not 'up to speed' with Consumer Duty implementation. Despite the FCA having only really started their own communication strategy (after the PS) in Q3/Q4 2022. Unhelpfully, Consumer Duty events are currently only for retail investment and mortgage firms, and booked up in many parts of the country until days before the rules come into force.
It is also a shame the FCA have proposed amending a number of definitions in the new rules already, which, for some firms, fundamentally alters their approach and obligations. We were not surprised at the changes proposed (we spotted them months back). But, ideally, there would be time to get back on track (especially as there are still areas to clarify based on this change).
Another factor slowing or inhibiting progress has been the need to implement this regulatory change project to align with new rules, including financial promotions and appointed representatives in Q4 2022 and Q1 2023. These are big changes and small firms only have so much bandwidth.
The good news is that there is a lot of information for firms to get into and use; a lot of guidance, and different sources and channels.
How can ComplyCraft help?
If you would like help, please ask.
We're helping lots of firms in a variety of ways. We have created tools to try and 'jump start' Consumer Duty implementation, provide some structure to a project or simply set out how and why (or why not) the firm is impacted.
We have already given these tools away for free to our retainer clients (we're nice like that).
So, what are you waiting for...? Just get on with it already!