Our Head of Investor Insight and Governance, Dawn, recently joined a panel discussion on the challenges facing firms as they tackle their Consumer Duty implementation plans, now that they have been approved by the relevant board. Culture, customers, demonstrating compliance and the danger of complacency all emerged as prominent themes.
Consumer Duty – where to go now?
While Consumer Duty affects the whole industry, the panellists felt that Asset Managers are likely to be further forward in their thinking given that they are already complying with PROD 3 and are several years into the value assessment process. Wealth managers, on the other hand, will not have had to look at governance and reporting structures in the same way before as they are coming fresh to some of the areas covered under the new Consumer Duty. Regardless of where firms are on their route towards compliance, one of the greatest dangers will be complacency.
This was the panel’s top list of things to tackle first:
- Building awareness across all levels of staff – embedding consumer duty into your firm’s culture is fundamental to what the FCA are hoping to see in a firm’s approach to their consumers. Managers across the firm have a critical role to play.
- How are manufacturers, distributors and platforms communicating along the value chain your firm sits in? Ensuring information comes in a timely and digestible manner along the chain is important to establish. There are industry-wide initiatives underway, but firms also need to reach their own view of what good looks like in terms of distributor engagement. Across the board we’re seeing people very focused on their own plans, and less cognisant of what is happening at the distributor side.
- Have you clearly defined what good outcomes look like and can you evidence that you are delivering against these?
- Scoping out where Consumer Duty overlaps with other programmes on your roadmap – for example, mergers, digital, new product launches – and assessing where there are opportunities and risks in those projects.
What should boards focus on now the implementation plans are outlined?
The FCA will be keen to know how much the board really understood the detail of the implementation plan before they signed it off, so it’s key that boards understand the next steps and, most importantly, what the scope of intervention is for the Consumer Duty Champion on the board.
Get a head start nowDeadlines are tight for implementation and the FCA will not accept that firms waited until the ink was dry on the regulation before they started acting. In the regulator’s mind, firms have been well-warned.
For those unsure where to start, the gap analysis should provide a clear steer on the areas that you need to tackle as a priority. Are your customer journeys providing support for your consumers, especially around major decision points? Are there known points of friction? Do you have a clear idea on what needs to be tested from a consumer understanding perspective? Do you have a framework in place that helps you target testing at the products or interactions that< touch end investors? The critical thing is to make a start.Get in touch to talk to us about how we can support your Consumer Duty plans.