Time is running out - Consumer Duty is on its way!

Are you ready for July 31st, 2023?

The deadline set by the Financial Conduct Authority (#fca ) for the launch of Consumer Duty, 31st July 2023, is fast approaching, and many firms may still be rushing to ensure they are compliant with new rules and regulations affecting firms across all financial services sectors. In this article, you will find out exactly what firms need to have done by the deadline day, and what help is available to achieve that goal.

What Does Your Firm Need to Do?

In simple terms be ready!

#consumerduty rules, which were finalised in July 2022, involve making sure businesses put the consumer first, treating them fairly, and understanding every aspect of the customer journey. These rules also require effective anti-fraud controls, and for each of the new regulations, firms will have to evidence their compliance.

Key actions firms must have taken:

1.????Understanding the requirements of the Consumer Duty set out in the FCA's Handbook. This includes determining the different types of consumers a firm interacts with, the different types of harm that consumers can suffer, and a firm's responsibilities to protect consumers from harm.

2.????Completed the identification and assessment of the risks of harm to consumers that arise from a firm’s products and services. This should also include considering the nature of the products and services, the way in which they are marketed and sold, and the characteristics of the consumers who use them.

3.????Putting in place appropriate governance arrangements to ensure that the firm complies with the Consumer Duty. This includes having a clear and consistent approach to managing consumer harm and ensuring that senior management is accountable for the firm's compliance with Consumer Duty.

4.????Taking appropriate action to mitigate the risks of harm to consumers. This may include changing the design or marketing of products and services, providing additional information to consumers, or offering compensation to consumers who have suffered harm.

5.????Establishing effective monitoring and reviewing compliance with the Consumer Duty on an ongoing basis. This includes reviewing a firm's products and services, the way in which they are marketed and sold, and the characteristics of the consumers who use them.

In simple terms, it is what you would hope firms would be doing already to ensure that #consumers can rely on receiving good outcomes for their #financialservices products.

Common pitfalls firms have made, include:

1.????Identifying the current gaps in the planning or execution of the Consumer Duty plan.

2.????Establishing and defining responsibilities, and accountabilities for the firm within their distribution chain.

3.????Highlighting and prioritising the key considerations in meeting the Consumer Duty requirements.

4.????Building a list of crucial documentation and reports to put firms back on track to meet the required deadlines.

5.????Creating a suitable monitoring program to ensure firms are well equipped to meet the ongoing requirements of the Duty.

It may seem daunting, but there is plenty of support available to make compliance easier for firms.

FCA Support for Ensuring Compliance

The FCA, not unsurprisingly given the tight deadlines it imposed, has published extensive resources to help firms understand and comply with Consumer Duty.

Last year, alongside the finalised rules, the FCA released the FG22/5 Final Non-Handbook Guidance for firms on Consumer Duty. In it, each part of the Consumer Duty guidance is clearly laid out for firms to understand. It also offers examples of various situations so firms can see how rules will need to be applied in context.

Also, at the beginning of the year, the FCA published a multi-firm review into how some larger firms were coping with and applying changes to regulation. It provided a look into how some firms have been approaching making the necessary adjustments and lays out areas for improvement that firms in similar situations may be able to focus on.

Additionally, the FCA website has plenty more information available to those who still need clarification. Alternatively, you can lean on specialists such as HAL Partners to support you through the process.