CONSUMER DUTY
Are you Consumer Duty compliant?
The deadline for Consumer Duty compliance has arrived, and financial services organisations have worked hard to ensure that they have the correct measures in place from 31st July 2023 onwards.
But with so many complex and far reaching programmes in flight, designed to implement disparate activities, process changes and outputs, the question we ask is:
How you can be sure that the customer outcomes resulting from your programme will genuinely meet the regulations?
We have written a series of articles designed to help organisations plan their approach to achieving and maintaining Consumer Duty compliance. You can find links in the sections below.
Consumer Duty Considerations: a series of articles on the steps to compliance
Defining your output against the regulation
- The Consumer Duty rules are simple in outline, but wide in scope, and a lot of detail sits behind the outcomes and cross cutting rules.
- We know from similar situations that what is actually implemented by projects can drift significantly away from what is required by the regulations. These divergences are not easy to spot while projects are in flight.
- The challenge is to ensure that real world outputs remain clearly aligned with the required outcomes defined by the FCA.
- A single customer view will be essential to understanding customer segments and how they are likely to interact with your organisation and distribution chain
- Firms will benefit from reviewing their control environment before the deadline, including measurement and monitoring, as well as the ownership, frequency and attestation of adherence to specified standards
- Read more about the challenges of Consumer Duty Compliance
Implementing the Consumer Duty programme
- Given the wide scope of the rules, compliance issues may emerge late in the day or after the July deadline, for example, dependencies on third parties
- Hard tactical decisions may be needed to get projects over the line, ensuring that impacts with the highest potential for customer harm are addressed, as well as areas where your organisation faces the greatest risk of non-compliance
- Consideration of closed products and backbooks can be pushed out, and lessons learned from the initial implementation can be adopted for these and other post deadline workstreams
- Read more about implementing the Consumer Duty
Distribution chain challenges
- Consumer Duty responsibilities extend beyond manufacturers into the distribution chain, bringing shared responsibilities and adding further complexity to compliance
- With responsibility comes a need for visibility. Widening the data sharing ecosystem could be pivotal to delivering and understanding customer outcomes
- An organisation may play different roles in the distribution chain for different products or customer segments. The extra challenges this brings may add significant cost and effort when providing intermediated products
- Read more about the distribution chain challenge.
Evidencing outcomes are met, documented and verifiable
- A regulatory ‘traceability matrix’ will help you to arrive at a ‘definition of done’, serve as a central control to give your board the oversight they need, and enable you to demonstrate compliance to the regulator
- Data and monitoring will be crucial, and it will be prudent to build a robust reporting framework before transition to BAU
- Read more about meeting the regulatory requirements.
Embedding change into the strategic roadmap
- The impacts of Consumer Duty not only need to be considered for existing products and services, but also for your future roadmap
- Consumer Duty will ultimately become part of daily life. However, firms that grasp the nettle, using the new rules as a springboard to ensure that they are servicing customer needs more effectively, may benefit from a competitive advantage, and see increased trust and advocacy from their customers
- Read more about how to embed the Consumer Duty across your organisation.
Assuring Consumer Duty Compliance – Watch the webinar recording
We recently hosted a webinar to discuss how to:
- Map your project outputs against the Consumer Duty outcomes and cross cutting rules
- Identify gaps and shortfalls, and prioritise how they can be addressed
- Define the data and reporting you need to be able to fully evidence to the regulator your compliance against the new rules
A link to the webinar recording can be found here.
How you can be sure that the customer outcomes resulting from your programme will genuinely meet the regulations?
Let’s make
change happen
We help Financial Institutions deliver change to optimise their business and operating models and succeed in a rapidly evolving world.
