Consumer Duty – NOWHERE TO HIDE!

The FCA reminded firms that the rules don’t apply retrospectively, but be under no illusion that this is, in fact, a warning in disguise! By the end of the implementation period, you will have nowhere to hide when demonstrating that you have met the requirements​. 

Bring out your dead! 

We understand how tempting it can be to manage issues offline rather than highlight explicitly where the problems are – but this isn’t going to help you. In fact, the complete opposite!​ 

Recording and reporting issues and risks you encounter as you implement the Duty is critical because:​ 

Firstly, it demonstrates that you have taken the Duty seriously; and ​ 

Secondly, it serves as an important date stamp and record of any issues that occurred before the Duty​ came into force. 

​Your priorities 

For those still struggling with where to focus effort, the FCA has set out three key areas: 

1. Effectiveness of Product governance: The FCA expects firms to ensure they can EVIDENCE products offer fair value to customers. Also highlighted was the expectation that firms consider the FCA’s value measures with the fair value assessment (published November 2022). Will your assessments and EVIDENCE stand up to muster?​
2. Effectiveness of communication with consumers: The FCA expects firms to ALIGN standards between sales and post-sale services – can you provide evidence that your customers get the same service at the back end as they do at the front?​
3. Claims processes and outcomes: The FCA expect firms to ensure customers are at the centre of claims processes, avoiding unreasonable delays and fair settlements – can you demonstrate you are tackling unreasonable delays and paying fair settlements? Have you reviewed your settlement approach as part of your plans?​ 

Vulnerable customers and the cost-of-living crisis 

The FCA has also reminded firms that failure to consider the diverse needs of customers – including those with vulnerability characteristics – will mean they will not comply with the requirements of the Duty.​ 

Additionally, the regulator stressed the impact of the cost-of-living crisis on vulnerable customers, highlighting that during this time, firms should pay particular attention to: ​ 

• ​Ensuring that firms are providing appropriate support for those in financial difficulty​ 
• Ensuring that claims are handled promptly and fairly​ 
• Ensuring consumers get access to fair-value products​ 
• Only proposing policies that meet customer’s demands and needs  ​ 

The FCA warned that they would take swift and appropriate action when they see firms not meeting expectations. Examples include revoking permissions, restricting business and asking firms to hold more capital​. 

ARs and The Duty 

The AR regime changes go hand-in-hand with the Duty. 

Principals 

• Have you got appropriate controls in place to effectively oversee your ARs’ activities and ensure that they comply with the Duty.? 
• Have you challenged and signed off detailed plans for how each of your ARs is going to meet the requirements of the Duty?​ 
• Have you set out how to monitor your ARs’ compliance with the Duty (outcomes testing, MI, attestations, audits)​? 
• Have you updated your onboarding/due diligence requirements for new ARs to meet the requirements of the duties? ​ 
• Have you agreed on roles and responsibilities?​ 

GreenKite can assist you by providing: 

• An independent health check of your existing plans – are you where you should be, and is your evidence up to scratch-up? 
• Independent testing of your communications to help you meet the requirements of outcome 3 
• Validation of your product governance and fair value assessments 
• Technical or project support to help you deliver your plans by the deadline  
• Consumer Duty policy and process design and implementation 
• Training and market benchmark insight (where are you compared to your peers in the market)