Consumer Duty - are you on track to be compliant by July?
On 27 July 2022, the FCA published its finalised rules and guidance for the new Consumer Duty. The intention being to raise standards within the industry and shift focus to consumer outcomes. With less than six months until the open-product implementation deadline, is your firm on track to be compliant by 31 July 2023?
One of our compliance proposition partners, RWA (part of the UKGI Group), gives a reminder on what brokers need to be considering and putting into action ahead of the deadline. This is the first article in a programme of support to help you be ready:
‘By now, all firms should have appointed a Consumer Duty champion at Board level (or equivalent governing body) to ensure the Duty is raised at all relevant discussions and that consumer outcomes are a key focus. Firms should also have an implementation plan in place, which they are working towards (the FCA milestone for implementation plans was 31 October 2022).
The Regulator recently published a review of several firms’ implementation plans which was conducted to better understand how firms are approaching the Duty. Acknowledging that we are now several months along from this milestone and firms will have made progress, the findings of this review are still extremely useful in understanding the FCA’s expectations.
Three key areas of focus were identified:
1. Effective prioritisation
Firms may need to review their plans and consider how they are prioritising the implementation of work. Triaging of tasks might be necessary to focus on areas most likely to reduce the risk of poor outcomes and where firms may be furthest from compliance with the Duty.
Some firms may wish to assess where work aligns with other ongoing initiatives as this could reduce efforts required. Firms may also evaluate where conflicts could arise, such as with timing or resources, so that they can take preventative measures.
2. Embedding the substantive requirements
Some plans suggested that firms may not have fully considered the implications of the Duty or that they may be overly reliant on existing policies and procedures. Firms must ensure they consider all necessary changes when reviewing products and services, communications, and customer journeys.
For many firms, implementation of the Duty will require a cultural change to embed customers’ interests throughout organisational strategies, leadership and policies. Providing training for staff at all levels will ensure they understand the significance of the new requirements and of their involvement in the implementation process. Greater emphasis should also be placed on soft skills training to allow staff to foster stronger connections with clients, helping them to recognise areas where customers may need additional support.
3. Working with other firms
Many plans did not include proper consideration for the sharing of vital materials with other firms in the distribution chain. It is essential that firms address this as soon as possible, to ensure they have all the necessary information to make the required changes in a timely manner. Key third-party relationships need to be identified and firms will need to consider what form co-operations will take e.g., outlining an engagement framework or conducting face-to-face workshops.
The FCA has set a ‘milestone’ for manufacturers, to complete all necessary reviews and share information with distributors by April 2023.
Consumer Duty gap analysis
RWA has launched a ‘Consumer Duty gap analysis’ to help firms implement the new rules and guidance. If you'd like more information about this or require any assistance in relation to the new Consumer Duty, please get in touch via email at helpdesk@rwagroup.co.uk or call 01604 709509’
Aviva Development Zone
Additionally, the Aviva Development Zone provides courses on the Consumer Duty to help staff understand the new regulation, as well as soft skills courses, such as communication skills, to help with implementation. If you’re not already an Aviva Development Zone user, you can find out more and take advantage of a 14-day free trial, by visiting https://mydevelopment.zone/.
What’s coming next to support you
This is part of a series of support that will set out in more detail about what you need to be considering in respect of the four Consumer Duty rules.
Look out for another article in the next few weeks as well as a webinar to give you a more in-depth view and the chance to ask any questions you may have. Keep an eye out for your invitation.