As July’s Consumer Duty deadline approaches, firms are looking to move from project delivery to incorporating the Duty into their business as usual. Albeit, while ploughing ahead with this transition, firms are still grappling with exactly what is expected of them by the regulator. Based on our current slew of Consumer Duty projects, our events, and conversations across the industry, we wanted to share some observations.
Post-July deadline, next steps
Many firms have embraced the arrival of the new Consumer Duty as the lever they have needed to drive customer-centric change. The jury is still out about whether the Duty will ultimately lead to greater cross-industry collaboration in product and solution design. If this is the end result, will we finally see the innovation and engagement the industry so surely needs?
Moving from tactical ‘quick wins’ to embedding the customer into the strategic evolution of products and services is likely to be a growing theme. We are already seeing a shift in tone and intent in our interactions with firms. Of course, there is still plenty to pull together ahead of July. Testing, training and check-ins with Board Champions are front of mind, but many firms are also looking well beyond July.
What do we see as ongoing challenges?
1) Data and evidencing against outcomes is a significant challenge for some firms, notably those with multiple legacy systems – and reporting will be an iterative process until boards feel confident that they have enough of the right MI to fulfil their obligations.
This will, no doubt, continue to evolve as firms look to review their back books as part of the July 2024 deadline that will come into view as this July comes and goes.
2) Client closeness is part and parcel of how Wealth firms do business – the challenge they are finding is in converting that soft knowledge of clients and their needs into robust data that’s FCA-ready.
3) The pensions space (and yes, many funds that sit in the DC space are in scope) is somewhere that will continue to be challenging from a consumer understanding perspective – and a lack of awareness among consumers that doing the minimum won’t be enough. At The Wisdom Council, our research has consistently highlighted a lack of engagement and preparedness when it comes to planning for a healthy financial future.
4) Consumer Understanding remains a nut the industry is yet to crack. This is definitely an area where there needs to be a sea change in how we talk to customers. Our hope is that a new retail disclosure regime will help to accelerate progress.
A continuous learning curve
The clients that we work with are tackling many of these challenges and others besides. We are supporting firms across the value chain through programmes of insight and consultancy around all the four outcomes – to help them evidence what they are doing and benchmark outputs in a way that will allow them to demonstrate improvements over time.
Increasingly, we are working with firms as a strategic partner to support ongoing Consumer Duty compliance. Please get in touch to find out more about how we could help your firm.