In a recent post by MyComplianceOffice, the firm outlined details from a recent speech that detailed the impact Consumer Duty has had on companies.
It’s been a quarter since the Consumer Duty deadline on 31 July set by the Financial Conduct Authority (FCA).
But what impact has it had on firms? Nisha Arora, FCA’s Director of Cross Cutting Policy and Strategy, has emphasised that Consumer Duty is far from a mere tick-box exercise. It’s about fostering a lasting cultural shift within the financial services sector. Firms are expected to continually evaluate and evidence positive outcomes for consumers.
Arora articulates that Consumer Duty is now woven into the FCA’s fabric, influencing their regulatory approach from authorisations to enforcement. “The Duty is now an integral part of our approach and mindset at every stage of the regulatory lifecycle – including authorisations, policy development, supervision and enforcement. So, you can expect it to be a golden thread that runs through all your conversations with us,” said Nisha Arora.
For compliance, firms need to demonstrate to the FCA their commitment to delivering beneficial results. This requires a robust implementation plan, meticulous data monitoring, and internal assessments. It’s crucial for firms to review the effectiveness of changes made as per their initial plans and to consider whether these amendments suffice in ensuring good consumer outcomes.
Moreover, the role of data and monitoring cannot be overstated. Firms must leverage this to gauge and document the effectiveness of their consumer-oriented efforts. Part of this process includes an annual review by the firm’s governing body, assessing customer outcomes and identifying necessary remedial actions or strategic adjustments.
In preparation for FCA evaluations, firms should rigorously scrutinise their Consumer Duty adherence, seeking areas of improvement. This entails ensuring that products and services align with consumer needs, effective communication strategies are in place, and that all firm members understand their roles in upholding the Duty. Proactive risk management is also vital to safeguarding customer benefits.
Arora has observed that successful firms concentrate on the outcomes they intend to deliver, coupled with a strategic approach to data collection and analysis, ensuring these outcomes are achieved. In contrast, firms falling short of FCA’s standards are often guilty of repackaging old data without a deep dive into the metrics that truly reflect consumer experiences.
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