FCA has 10 questions ahead of Consumer Duty deadline
The City watchdog is asking regulated firms whether they have identified the key risks in their ability to deliver good outcomes to customers, and whether they have put appropriate mitigants in place, ahead of the Consumer Duty deadline.
The Financial Conduct Authority (FCA) has put together a list of 10 questions for firms to consider before the Duty comes into force on 31 July.
The Duty sets higher and clearer standards of consumer protection across financial services, and requires firms to put their customers’ needs first. The rules relate to four key areas: products and services; price and value; consumer understanding and consumer support.
“The Duty is a significant shift in our expectations, and we’ve been pleased to see many firms working hard to meet these new, higher standards,” the FCA said. “Our recent firm survey found that the majority of firms in the sectors covered believe they are on course to fully implement the Duty on time. However some have more to do to meet the deadline.
“It’s crucial that firms are asking themselves the right questions, to make sure they are on track and making the most of the remaining time.”
Read more: Two-thirds of UK lenders yet to review Consumer Duty requirements
The regulator also said that it expects boards and management bodies to have “clear oversight” of Consumer Duty implementation plans.
“By this stage they should have identified any potential gaps or weaknesses in the firm’s compliance and developed a plan to remedy this,” the FCA said.
Read more: Consumer duty milestone approaches: Are P2P firms ready?
The regulator said that its 10 questions should help firms reflect on their implementation of the new Duty, and identify areas for improvement. It said that firms can expect to be asked questions like these in their interactions with the regulator.
The FCA’s 10 questions for firms are:
- Are you satisfied your products and services are well designed to meet the needs of consumers in the target market, and perform as expected? What testing has been conducted?
- Do your products or services have features that could risk harm for groups of customers with characteristics of vulnerability? If so, what changes to the design of your products and services are you making?
- What action have you taken as a result of your fair value assessments, and how are you ensuring this action is effective in improving consumer outcomes?
- What data, MI and other intelligence are you using to monitor the fair value of your products and services on an ongoing basis?
- How are you testing the effectiveness of your communications? How are you acting on these results?
- How do you adapt your communications to meet the needs of customers with characteristics of vulnerability, and how do you know these adaptions are effective?
- What assessment have you made about whether your customer support is meeting the needs of customers with characteristics of vulnerability? What data, MI and customer feedback is being used to support this assessment?
- How have you satisfied yourself that the quality and availability of any post-sale support you have is as good as your pre-sale support?
- Do individuals throughout your firm – including those in control and support functions – understand their role and responsibility in delivering the Duty?
- Have you identified the key risks to your ability to deliver good outcomes to customers and put appropriate mitigants in place?
“Once the Duty is in force we will prioritise the most serious breaches and act swiftly and assertively where we find evidence of harm or risk of harm to consumers,” the FCA added.
Read more: FCA warns firms of ‘swift action’ if they ignore Consumer Duty