Bringing Consumer Duty Home: Three Final Steps Before the Deadline

Where does the time go? Summer is upon us, and the 31st July deadline for implementing the Consumer Duty is barely a month away.

In a recent straw poll of PIMFA members, it was good to see that 57% were confident that they would be compliant by the deadline – but on the flipside almost half were concerned to some degree that they would not be compliant.

If you find yourself in this position, you may think that there is little you can do to change what can and can’t be delivered by the deadline. But all is not lost.

There is still time to review your plans and refocus on the changes that will really matter to customers, and that will ensure your compliance with the regulations. Effective prioritisation and careful planning, even at a late stage, are often crucial factors in assuring timely delivery of new activities, processes and outputs, and whether they take root successfully across an organisation.

Now is the time to step back and ask yourself some important questions such as:

• What actions are needed to ensure that the most important items in your plans are successfully delivered?
• How can you ensure that changes are incorporated effectively and smoothly into ‘business as usual’?
• What gaps do you have and how might they be addressed prior to the deadline or shortly afterwards?

What are the FCA’s priorities?

Let’s remind ourselves of the priorities highlighted by the FCA in recent months. Broadly these can be summarised as:

• The FCA will take a pragmatic approach, targeting the products and services which pose the biggest risks to customer harm, and prioritising serious breaches;
• Firms should focus on key areas the FCA has highlighted in its reviews and speeches where implementation is not meeting expectations;
• Firms are expected to understand and evidence the outcomes their customers are experiencing. They need to ensure they are making material changes and not relying too heavily on existing systems, data or processes; and
• Consumer Duty is a major culture shift for firms (and the FCA). The new rules are about putting the customer first and embedding this mindset through your organisation from the board downwards.

Keep these points in mind as we step back and review our Consumer Duty deliverability with a few weeks to go.

1. Assess your current position

The first step is to honestly assess where you are today, and how confident you are that you will be materially compliant with the regulatory requirements by the deadline. Think about whether your products or services could cause harm or risk of harm to your customers.

Are there any significant weaknesses in your current approach? Have you appropriately addressed these in your plan, and if not, can they be addressed before the deadline? Otherwise, you must plan to address them afterwards.

The FCA expect Consumer Duty to drive genuine improvements, so it is worth asking whether the changes in your organisation are material. For example, have you changed the pricing of any of your products? Have you had to withdraw or substantially redesign any products, or changed the way they are communicated or distributed?

If the impact of Consumer Dity has been minimal, you need to be confident that you can justify why that is. If you’re using only existing data for your measurements, you need to be clear on why that is appropriate and how all aspects of Consumer duty are covered.

2. Review your action plan

The next step is to review your action plan and close down any areas of concern. Check that all of the following are in place:

• The scope and prioritisation of activities within the remaining weeks are still appropriate;
• Sufficient people are engaged with the project, and they have the skills and experience to see it through;
• Budget is in place to complete the work and continue with the next phase of the plan if there is one;
• There is robust project governance in place, you have clear evidence and audit trails, ownership of responsibilities is clear including how you will perform ongoing monitoring and controls; and
• There is an agreed closure process and clear ‘definition of done’ for each major deliverable in the plan.

3. Crossing the finish line

The last important thing you need to think about prior to the deadline is business readiness and embedding any new procedures or project outputs.

People or teams that need to change how they work after the deadline need to be thoroughly briefed and ready to adopt the new ways of working if they are not already doing so. Be sure to address any concerns or questions that they may have.

Involve key stakeholders throughout the change process and particularly in the final stages of implementation. Ensure that all the final boxes have been ticked and everyone is comfortable to go live.

Your Consumer Duty programme is likely to have resulted in numerous changes to your firm’s activities and processes, so make sure that these changes are captured, documented and evidenced at the right level of detail – for example, why decisions were taken, what the new procedures are, who signed them off, any supporting evidence, and so on. This information needs to be easily accessible should you ever have to explain or review your thinking.

Time is short, but by taking a few hours to review your priorities at this stage, your likelihood of achieving compliance by the Consumer Duty deadline will improve, and the odds of last-minute disasters will be reduced.

Matt Neil – Partner, Beyond

Matt has over 15 years’ consultancy experience helping financial services clients navigate complex transformation and the ever-changing regulatory landscape, working with operations, compliance and technology leaders to deliver their critical initiatives.

If you would like an external perspective on your firm’s preparedness for Consumer Duty, specialist consultancy Beyond are offering a free no-obligation Consumer Duty Readiness review to PIMFA members which will typically take around 90 minutes. To request a review, please email robin.sapherson@beyondfs.co.uk and they will get in touch.