Consumer Duty : Understanding and navigating the FCA’s Consumer Duty


INSIGHT
Published
Jan 19th '24
Share
Facebook

As we step into the New Year, The Financial Conduct Authority (FCA) has made it abundantly clear that its focus remains firmly fixed on the consumer duty.

 

The FCA’s recent consumer duty webinar shed light on the regulatory expectations for firms, governing bodies, and the steps needed to ensure compliance. In this article, we delve deep into the key takeaways from the FCA’s webinar, providing valuable insights and guidance for firms operating within various sectors, including insurance, banking, consumer investments, and consumer credit.

 

Consumer Duty: The Continuous Journey of Compliance

The FCA’s message is crystal clear: Consumer Duty is not a one-and-done exercise. Firms are urged to continuously challenge themselves in meeting the Duty’s requirements, emphasizing ongoing monitoring and measurement. Using data to assure that outcomes align with customers’ interests is paramount.

 

Consumer Duty:  Closed Products and Services

For firms dealing with closed products, the next deadline looms on July 31, 2024. These firms must review their closed products’ designs to identify potential harm or hindrance to customers’ financial objectives. While the Duty doesn’t necessitate identifying a target market and distribution strategy for closed products, it does require compliance with cross-cutting rules. Ensuring that closed product customers receive necessary support, comprehensible communications, and fair value is essential. Firms must also analyse why products were closed and take steps to prevent similar occurrences.

 

Consumer Duty:  The Role of the Board/Governing Body

The FCA emphasizes the role of boards and governing bodies in reviewing and approving annual assessments. These assessments should gauge whether firms are delivering favorable outcomes consistent with the Consumer Duty. Boards must consider monitoring results, identify poor outcomes, and evaluate their root causes and impacts. The FCA will scrutinize board reports, ensuring that firms take them seriously and act decisively.

 

Consumer Duty:  Fair Value Assessments

Fair value assessments go beyond just pricing. Firms must consider the overall value of their products or services, including support quality, product features, and distribution channel flexibility. Advisory services may justify higher costs, while some products may require scrutiny for fairness in commission payments. Fair value assessments should be ongoing, adapting to changing market conditions.

 

Consumer Duty:  Supporting Vulnerable Customers

Consumer Duty places a spotlight on supporting vulnerable customers. Some firms excel in centralising processes and deploying experienced staff, resulting in improved handling and data quality. However, a one-size-fits-all approach is discouraged. Firms must adopt a nuanced strategy for dealing with vulnerable customers, ensuring that staff are confident in their interactions. Testing customer understanding and actively seeking feedback are vital components of this strategy.

 

Consumer Duty:  Information Sharing

Manufacturers and distributors must share information that aids in product development, target market identification, and issue resolution. Collaboration is key, but information sharing should be proportionate and efficient. Firms need to agree on the data necessary to enhance customer outcomes while avoiding unnecessary burdens.

 

Consumer Duty:  FCA Supervision and Enforcement

The FCA sees Consumer Duty as integral to its work, employing supervisory and enforcement tools when necessary. They prioritize working with firms through supervisory conversations to drive voluntary changes. However, formal powers may be invoked if firms are slow or unresponsive. Multi-firm, thematic, and cross-sector reviews are part of the FCA’s arsenal to ensure compliance.

 

Conclusion

Consumer Duty is no longer on the horizon; it’s here, and it’s here to stay. The FCA is resolute in its commitment to ensuring good customer outcomes, and firms are expected to proactively monitor and act in alignment with these objectives. Compliance is not just a regulatory requirement; it’s a continuous journey towards better customer outcomes.

 

In conclusion, staying informed, proactive, and adaptable is the key to navigating the consumer duty landscape successfully. As we embark on this regulatory journey in 2024, let us remember that compliance isn’t just about ticking boxes—it’s about delivering value to customers and safeguarding their interests.

 

For more insights and resources on FCA compliance and governance, contact us today!

 

Related:

Call us on +44 (0) 20 8087 2377  or email us.

 

If you want to get the right advice, quickly, with clear and totally transparent, unshackling yourself from the confines of an antiquated compliance support service, then contact us.

 

Contact us

 

About us

LS Consultancy are experts in Marketing and Compliance, and work with a range of firms to mitigate risk.

 

We provide a cost-effective and timely bespoke copy advice and copy development services to make sure all your advertising and campaigns are compliant, clear and suitable for their purpose.

 

Our range of innovative solutions can be tailored to suit your unique requirements, no matter whether you’re currently working from home, or are continuing to go into the office. Our services can be deployed individually or combined to form a broader solution to release your energies and focus on your clients.

 

Contact us today for a chat or send us an email to find out how we can support you in meeting your current and future challenges with confidence.

 

Explore our full range today.

 

Contact us

 

Why Not Download our FREE guides.

 

Call Us Today on 020 8087 2377 or send us an email.

 

FOLLOW US

Connect with us via social media and drop us a message from there. We’d love to hear from you and discuss how we can help.

 

Facebook | Instagram | LinkedIn | X (formerly Twitter) | YouTube

 

Contact us