The Financial Conduct Authority (FCA)’s Consumer Duty rules were announced in July 2022 and came into force for open products and services in July 2023.
In February 2024, the FCA published new guidance on what firms could improve with regards to their implementation of the Consumer Duty.
We have been helping firms understand and adhere to the Duty since before the new rules were announced. In this article, we will explain:
- What to know about Consumer Duty
- How fscom can help you comply with Consumer Duty
- How we helped a B2B fintech with their Consumer Duty Implementation Plan
If you would like advice or support to complete your Consumer Duty Framework or board reports, please get in touch with the team.
What to know about Consumer Duty
Consumer Duty was created by the FCA to ensure firms deliver good customer outcomes at every stage of the customer lifecycle. Below is an overview of key information on the Duty:
- Its purpose is to ensure firms achieve a high standard of care and good practice
- It expects firms to:
- act in good faith
- avoid causing foreseeable harm
- enable and support customers to pursue their financial objectives
- As guidance, the FCA has highlighted four areas that represent key elements of the firm-consumer relationship:
- products and services
- price and value
- consumer understanding
- consumer support
The FCA’s Consumer Duty guidelines were published on 27th July 2022, and came into force on the 31st July 2023 for existing products. The 31st of July 2024, was the implementation deadline for closed products.
Understanding the Consumer Duty Framework
The purpose of a Consumer Duty framework is to ensure you conceptually understand what you need to do to achieve each outcome and to help with decision making.
It should be a north star for your operational teams, as much about ongoing maintenance as about new initiatives. Things will change over the next few years. There will be new laws, new types of providers, market conditions and business models, so your implementation plan must allow for evolution.
When we work with clients, we use a Consumer Duty framework which includes:
- Nominating a Consumer Duty Champion
- Target Market Analysis and Identification – Customer Profiles
- Target Market Analysis and Identification – Product analysis and testing
- Fair Value Assessment Framework
- Customer Understanding Assessment & Testing Framework
- Customer Outcome Monitoring Framework and Root Cause Analysis
The framework helps regulated firms understand what needs to be implemented before applying for an FCA licence, as well as what you need to make sure to maintain in order to adhere to Consumer Duty standards.
If you’re looking for support implementing a Consumer Duty framework, reach out to one of our compliance experts.
How can fscom help you comply with Consumer Duty?
We have experience helping firms implement the entire Consumer Duty implementation process.
Here are some examples of what that support looks like in practice.
Create a board report you can submit with confidence
When you are putting together a board report, you might have questions about how to write it, present it, or what the ideal consumer outcomes should be.
We will help validate your current board report by finding gaps and identifying areas for improvement. Alternatively, we can help you write the report from scratch, so you’re certain it’s completed correctly. We’ll also make sure the report includes the right data and recommendations and is comprehensive enough to satisfy the Board.
In addition to that, we can also support the Board to analyse the data presented to them, ask the probing questions of the executive team and draft their own assessment of implementation.
With this support, you can submit your board reports in the confidence that you’re meeting the FCA’s expectations and timeframes. Plus, you’ll have the correct processes in place for successful future submissions as well.
Access our board report templates here:
Ensure your Consumer Duty framework is thorough and watertight
The FCA has asked firms from across the financial services sector to demonstrate the actions they have taken to implement and embed the Consumer Duty. They have asked to see policies, procedures, management information and assessments and asked in-depth questions about approach. Many firms have received individual feedback and thematic reports are expected soon.
To ensure nothing has been overlooked during your initial gap analysis, we can conduct our own assessment of your retail customer journeys, test various scenarios, analyse your data and assess the implementation of the Consumer Duty to identify issues in your approach and find areas for improvement. And finally, as an applicant we can help you put your plan into action by giving you a dedicated subject matter expert to help you deliver one or more of the projects on your roadmap.
This ensures that everything has been thoroughly considered, every aspect of your customer lifecycle has been meticulously reviewed, and your plan aligns well with final regulations. Our interim support service can also bolster your team with the resources and expertise it needs to complete the project.
Establish new processes to ensure ongoing Consumer Duty compliance and upskill your team for the years ahead
Consumer Duty is a firm-wide responsibility. The ultimate goal is that your business processes are such that the obligation is fulfilled as naturally as any other business purpose.
We can provide you with a subject matter expert who will join your firm if you’re an applicant team on a fixed-term basis. They will attend meetings, contribute advice, and support the delivery of the plan. Once the new processes are in place, they will conduct training and then hand the project over. A retainer will be agreed in advance so you know exactly what the project will cost.
With this, you can be sure that you won’t only meet the criteria but you have the internal knowledge to ensure Consumer Duty rules compliance in the years ahead.
Our list of services includes:
- Consumer Duty Healthcheck
- Consumer Duty Implementation Support
- Consumer Duty Interim Support
Learn more here: Consumer Duty Advisory
Case study: How we helped a B2B fintech with their Consumer Duty Implementation Plan
A B2B fintech came to us for support in implementing an element of their Consumer Duty plan. They already had their customer journeys mapped, and we were asked to:
- conduct an assessment to identify potential gaps;
- provide suggestions for improving the journeys; and
- prioritise their actions following the assessment.
Our assessment uncovered an important service gap: Once the customer account was closed they wouldn’t be able to contact customer support or access their customer portal because it was only available via the app – which they no longer had a log-in for.
After identifying this issue, we worked with the fintech company to design a solution that would provide a better outcome for the customer. In this case, it involved adding more information to the communications to ensure the customer has access to all the information they need once they’ve closed their account.
By working with fscom, the B2B fintech can be sure they meet the regulatory requirements, now and in the future.
Implement Consumer Duty correctly into your business with confidence with fscom
Consumer Duty requires a conceptual mindset shift about putting the customers’ needs at the centre of your business. It also demands expertise and resources that you might not have internally yet.
At fscom, we’re here to guide you in the right direction. Our experts are on hand to support you as needed, giving you the peace of mind of knowing that you’re ready if and when the FCA comes knocking. In addition, we’ll ensure you have the skills and knowledge to manage Consumer Duty internally to retain those skills in-house.
Discover how to integrate Consumer Duty correctly into your business with confidence. Get in touch today.
