Consumer Duty: What Does it Mean for Your Business?
The UK’s Financial Conduct Authority (FCA) finalised its plans for a new Consumer Duty back in 2022, representing a significant change in the nation’s regulatory environment. Now that the deadline for implementation draws near, will companies be ready for the road ahead?
Firms are required to finish their review of existing products by April 30th, 2023, in time for the new rules rolling out on July 31st. For closed products, the rules will take effect on July 31st, 2024.
Why are the Rules Changing?
The rationale behind the rule change is to improve and protect the customer experience in the financial services space. In theory, higher standards of consumer protection will result in greater accountability, better customer outcomes, and a shift to a new business archetype.
A culture of trust and transparency is critical in financial services – the new Consumer Duty rules aim to establish the scrutiny and customer empowerment needed to build it.
Will the Rule Apply to You?
The rules will apply to any UK-authorised firm that provides financial services or products to retail customers across four distinct categories: Consumer credit, insurance, deposit-taking, and investment services. Each category is consumer-centric, excluding professional clients. In the case of deposit taking, the new rules also apply to charities and microenterprises.
What do You Need to Do?
One of the largest regulatory overhauls in ten years is bound to prove challenging. It’s worth asking yourself some key questions to get an indicator of where you’re at:
1. Are my policies and comms updated, and if necessary, amended to comply with the FCAs requirements?
2. Are my staff appropriately trained and capable of understanding and upholding the new Consumer Duty rules?
3. Do I have the right regulatory talent on board to pilot my company to success?
4. Are we equipped to identify and assess areas of potential harm in our products or services?
5. Are we in a position to cover the four outcomes:
a. Products and Services
b. Price and Value
c. Consumer Understanding
d. Consumer Support
It’s important to note that the scope of the Consumer Duty changes is extremely broad, even encompassing organisations that do not deal directly with consumers. Familiarising yourself with the full breakdown of the changes, requirements, and expectations is essential. You can find them alongside a timeline of key dates on the FCA’s website here.
Do You Need Support?
At Broadgate, our specialist consultants have access to a vast global network of compliance talent, and we use a people-focused, diversity-led staffing methodology to ensure we place the right people in the right roles.
Navigating through complex regulatory changes will necessitate the need for sturdy regulatory and compliance functions. If you have any questions at all regarding our people, processes, values, or community, get in touch with Broadgate, the business protection and enablement experts – we’re here to help.