The Financial Conduct Authority’s (FCA) implementation of the Consumer Duty comes into full force for new and existing products or services that are open to sale or renewal on 31 July. This new regulation represents a significant shift in expectations for UK financial firms, emphasizing the need to prioritize consumer outcomes and reduce the risk of harm. While many firms are working diligently to meet these higher standards, some still have progress to make.
If your firm is one of those, we have you covered! This is your guide to the Consumer Duty and how your firm can ensure compliance.
What is the Consumer Duty?
The Consumer Duty is a regulatory framework introduced by the FCA to enhance consumer protection in the financial sector. It aims to ensure that products and services are designed and delivered with the best interests of consumers in mind. The Duty places a strong emphasis on delivering good outcomes for customers and reducing the potential harm caused by financial products or services.
Firms should note that for new and existing products or services that are open to sale or renewal the rules come into force on 31 July 2023, whereas for closed products or services, the rule comes into force on 31 July 2024.
To achieve this, the FCA has conducted a review and survey and provided guidance and a set of 10 key questions for firms to consider during their implementation of the Consumer Duty. These questions cover various aspects such as product design, vulnerability considerations, fair value assessments, effective communications and customer support.
What has the FCA advised firms to do to ensure compliance?
To meet the requirements of the Consumer Duty by the implementation deadline, financial firms are advised to take the following steps:
- Maintain clear oversight.
Boards or equivalent management bodies should have a comprehensive understanding of the Consumer Duty and ensure that implementation plans are in place and are being followed to completion.
2. Identify gaps and weaknesses.
Firms should conduct thorough assessments to identify any potential gaps or weaknesses in their compliance program and develop a plan to quickly address them.
3. Reflect on key questions.
Firms should review and reflect on the 10 key questions provided by the FCA’s finalised guidance (FG22/5). These questions serve as a valuable self-assessment tool and can help firms identify areas for improvement.
4. Utilize available resources.
The FCA has provided a wide range of resources on their Consumer Duty page, including guidance, podcasts, speeches and informational updates. Firms are encouraged to make use of these materials to better understand the expectations and implementation of the Duty.
How can ComplySci Platform help financial firms meet Consumer Duty standards?
The ComplySci Platform is a comprehensive compliance solution designed to assist UK financial firms in meeting the standards set out by the FCA, including that of the Consumer Duty. By leveraging our integrated technology solution, firms can:
- Extract reports and analysis of all compliance activities.
- Document a full audit trail of compliance communications.
- Provide evidence to support your processes and procedures.
By leveraging the capabilities of the ComplySci Platform, financial firms like yours can streamline their compliance efforts, enhance transparency and proactively meet the standards set forth by the Consumer Duty.
Schedule a demo today to learn more about how ComplySci can support your ongoing compliance efforts!