While a majority of firms have heeded the Financial Conduct Authority’s (FCA) advice that the Consumer Duty represents “a watershed moment” that they should take seriously, there may still be a few firms that have yet to act.
PIMFA is reminding those firms still to act that there is a wealth of high-quality, original information, as well as numerous helpful resources that will enable them to comply with the Consumer Duty regime on its website, which it would encourage firms to access.
In addition, PIMFA has published a FREE Consumer Duty paper, in partnership with several of its expert associate members including KPMG, DAC Beachcroft, Shoosmiths and Altus Consulting, which focus on sharing insights around areas that the FCA highlighted as being of particular importance when they spoke at a PIMFA CEO Consumer Duty Roundtable in March.
At the event the FCA set out seven questions they are likely to ask firms, when the Consumer Duty comes into force, indicating what the FCA is thinking and its approach.
Those questions are:
1. What are you doing to segment your clients based on different outcomes?
2. Do you have the data and management information to track the outcomes related to each client group?
3. What impact has this segmentation work had on your charging models?
4. What is the proportion of clients for whom ongoing service charges genuinely represent fair value?
5. What changes will you make to remuneration models to shift to an outcomes-based focus?
6. To what extent do you need to change employee behaviours - how are you doing that, how will you track progress, and how do you know you have succeeded?
7. What assurance do you need regarding discharging of your personal responsibility under SMCR?
As has been warned before, the FCA's expectation is for a cultural shift where the firm's mindset and all product lines are aligned to deliver good outcomes for consumers. Existing product governance, code of conduct frameworks, and vulnerable customer strategies can provide a foundation for firms to build on to meet the requirements of the Duty.
The FREE PIMFA paper includes:
• A summary of the Consumer Duty requirements and some of the challenges firms face
• Practical guidance on likely FCA expectations
• Steps firms should be taking to meet them, based on each of the questions above
• Tips for firms on substantive compliance and what this means in practice
• And a 'Consumer Duty Self-Assessment tool' by Altus Consulting. This is a free tool to help firms assess their progress in complying with the Consumer Duty against a common industry benchmark
Alexandra Roberts, Head of Regulatory Policy and Compliance at PIMFA, commented: “With just 28 days to go until the Consumer Duty comes into force it really is time for firms to make sure they are ready, or at the very least, on course to be ready by 31 July.
“Firms have been warned before, but it bears repeating that the Consumer Duty is not just an extension of Treating Customers Fairly. The Consumer Duty will bring about fundamental changes to the way in which firms are supervised and regulated and requires a cultural shift in attitudes.
“If any firms still need help there are lots and lots of resources on the PIMFA website but the team and our associate members are also happy to help so please use the information and resources available to ensure you meet the deadline.”
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