With six months remaining before the new Consumer Duty rules come into effect, the Financial Conduct Authority (FCA) have published an update warning that, as it stands, select firms may not have enough time to apply the Duty effectively. With the deadline fast approaching (July 31st), the regulator became aware that the planning of some firms was far behind where it needed to be.
In today’s blog, we’ll be taking a closer look at the FCA’s warning. Then we’ll be discussing the rules that need to be implemented by the end of July.
FCA warning: Significant steps need to be taken
Upon reviewing a sample of select firms’ plans, the executive director of consumer and competition at the FCA, Sheldon Mills, reminded companies that “significant changes” must be made. However, while some firms may be behind in preparing for the Consumer Duty, Mills did also stress that there is time to put things right.
According to the FCA, firms who have fallen behind should prioritise the areas that are going to have the largest impact on their consumer outcomes. And their update wasn’t exclusively foreboding, either. They also noted that some of the governance frameworks developed by firms seemed to be “robust”.
Tips for getting ready for Consumer Duty
So, if you’re a firm that’s got some work to do in regards to Consumer Duty, how can you make sure you right the ship? Here’s a few tips…
An obvious one, especially in light of the FCA’s recent warning, but it bears repeating. Ensuring that your processes, products and services are going to be compliant is going to take some time. While July may have seemed like a long way off back when these regulations were announced, the deadline is now just months away. This isn’t something that you can rush; make sure you have enough time to give it thorough thought.
Ensure your customers are going to be protected
At the forefront of Consumer Duty is the goal that customer harm be avoided. At every stage in the advice process, your firm should be ensuring that a client is protected. This will likely require an extensive review of your approach.
Keep value in mind
With Consumer Duty approaching, you should be focusing on driving good outcomes for your clients, rather than on what those clients are paying. That means that your products need to be not only fit for purpose now, but that they’ll also be fit for purpose in the future. Products should be flexible, with the ability to adapt to the changing needs of a customer as time passes.
It’s also worth mentioning that the July deadline is just the beginning of these new rules. Once you’ve ticked all the right boxes, sure, you can breathe a sigh of relief- but you should also be looking forward. It’s likely that more regulations will be coming.
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