Are you Consumer Duty ready?
Posted on 26th June 2023 at 09:37
As this summer’s deadline for the FCA’s Consumer Duty fast approaches, our Risk and Compliance Practice Lead, Mike Rogers, shares essential advice to help financial services organisations to be fully prepared for when the rules come into play on the 31st July.
How complex will the impending Consumer Duty rules be for companies to implement effectively?
All retail financial services firms will be well versed in delivering the outcomes of the FCA’s long-standing Treating Customers Fairly (TCF) rules.
Consumer Duty builds on this and requires businesses to demonstrate clearly how they are delivering the four outcomes of the duty, which are products and services, price and value, consumer understanding and consumer support. In doing this, they must be able to show how they are taking measurable action with their culture and governance and monitoring outcomes.
The main challenge for companies will be to ensure that they are following the spirit, as well as the letter, of the regulation, and that they have mechanisms in place to measure their culture - something that is inherently intangible and difficult to track.
Are there any potential pitfalls companies need to keep in mind?
Without clear direction on the planned outcomes, along with people’s individual roles and contributions, it can be difficult to give the programme of change the coherence it requires. By developing a clear vision, underpinned by a roadmap of change that can be easily understood across the organisation, the chances of a successful outcome are greatly increased.
Are there any benefits above and beyond compliance that companies may gain by being ready before the 31st of July?
There are always advantages to be gained by putting regulatory and compliance initiatives in place early. They allow businesses to get used to new ways of working and enable behaviours to become embedded.
Any business that implements the regulation well is likely to see a positive reaction from its existing or future customers. Implementing changes ahead of the deadline will allow organisations to identify early any issues that new products might face.
Who should be leading the changes in a business and what core business areas need to be involved?
On paper, all areas that interact with, or impact consumers, must demonstrate that they are achieving the outcomes of Consumer Duty.
In reality, everyone across the business should be involved. The duty needs to be embedded in the culture of financial service organisations. Each and every employee must understand how the business will perform with changes to operating models.
I would expect it to be a priority for most Boards and C-suites to demonstrate what living and breathing Consumer Duty looks like to their organisations and align this with their responsibilities under the Senior Managers and Certification Regime (SMCR). Having a senior champion for the regulation, as the FCA recommends, can really help with this.
How can companies be sure that they are ready for the rules to land?
31st July is a challenging deadline for many companies. For some, plans are still high-level and missing the detail required to deliver the outcomes, so there is a significant compliance risk.
Companies need to be managing the delivery of the key activities within their plans and making sure that all parts come together right now. If they are still unsure of what’s to be done, developing a set of measurable outcomes, that can be tracked and monitored at the most senior level, will help them gain confidence that they will get to where they need to be.
Publicising this across the organisation with a clear champion or champions will help focus everyone’s minds on the job at hand.
How can Iridium support companies to prepare?
Our extensive experience of working within FCA regulated environments has put us in a unique position to support both through direct delivery and finding the right partners to support a wholistic solution.
Speak to Mike
Mike has been delivering a range of regulation, compliance and business changes for some of the biggest names in financial services for over a decade and specialises in providing end-to-end advisory services to deliver programmes that meet new and evolving regulations. Connect with Mike: firstname.lastname@example.org
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