In a survey of 1,230 firms carried out by the Financial Conduct Authority and Ipsos, published at the end of June, 64 per cent of firms surveyed said they would be fully compliant with the new consumer duty by the July 31 deadline.
However, a further 23 per cent said that, while they would comply with most requirements by the deadline, they would still have some work to do, and 7 per cent of firms surveyed said they would still have significant work to do after the deadline or had not started work on the duty at all. This suggests that there is more to do in levelling the field.
Therefore, adding to the extensive work Pimfa has already undertaken in helping our members and the wider industry in their approach to this very complex regulation, we have identified four key areas where further help may be needed by some firms in their efforts towards becoming compliant.
While this is inevitably set to be a hot topic at our annual Compliance Conference, being held on September 21, Pimfa’s head of regulatory policy and compliance, Alex Roberts, who has led our work on consumer duty and chairs our working group, has created four videos addressing these areas: supply chain, the data challenge, culture and vulnerable customers.
Supply chain
On the supply chain front, the FCA has made it clear that firms must work together across the manufacturing and distribution chain to deliver good outcomes and the importance they place on collaborating with commercial partners was highlighted in the FCA's Sheldon Mill’s speech at the beginning of the year.
This video includes an assessment of the possible issues involved, such as the actions expected of different firms in the chain; the difficulties for firms to obtain relevant information for product or service reviews; and the new requirement to inform the FCA of non-compliance by other firms in the distribution chain.
Data challenge
Regarding the data challenge, while most firms already have a data strategy in place, it will need to be adapted and built upon to incorporate the requirements of consumer duty.
Information includes the FCA’s expectations on the ‘what and how’ of data use, the need to explain how decisions are reached, and the three components required from a systems and processes perspective.
Culture
Culture has been at the top of the FCA’s agenda for the past few years, but the introduction of consumer duty has raised expectations even higher on how firms define, embed and measure culture within their organisations.
Culture is referred to throughout the FCA’s consumer duty finalised guidance and it has been emphasised repeatedly in recent speeches that it is not simply a question of ‘getting consumer duty done’ but of embedding the new regulation in all aspects of your business.
Vulnerable customers
The duty makes clear reference to the fact that firms need to pay attention to the needs of customers with characteristics of vulnerability and there is an expectation that firms proactively identify the outcomes for different groups of customers, in particular vulnerable customers, as part of their target market analysis.
