Consumer Duty – The Race is On

Now the dust has settled on the race to get implementation plans in front of boards by the end of October, firms have started the New Year realizing the mountain of change required to be ready for the implementation deadlines. This is highlighted in the FCA’s report this week, which outlined where firms may need to develop their plans and approach further to ensure they meet its expectations under Duty.

We discuss how we suggest firms approach the design and implementation of a proportionate framework further below, but, before we do, we wanted to highlight a few other key areas where we see the greatest impact and challenge for firms.

Figure: Consumer Duty Key Impact Areas

Clients we are supporting may have slightly different approaches to implementation in a number of workstreams and timelines, but the above areas are fairly consistent in terms of where the most significant change and work is required. Many of these areas align with recently published FCA findings where they set out good and poor practice they have seen from recent information requests for implementation plans and evidence of Board engagement.

It is pleasing to see those areas we know some of our clients have been spending considerable time and effort on being acknowledged as good practice. That said, there is a lot of work to do across each of the key areas highlighted above and in the FCA report to meet their expectations and deadlines.

As alluded to above, one of the areas firms are rightly prioritizing, and which we do a ‘deep-dive’ in this article, is the design of an appropriate value assessment methodology for products and services, given the fast approaching end of April deadline for product manufacturer reviews. Alpha has typically seen firms approaching the value assessment of its products and services in one of two key ways:

Regardless of the approach you take, at the heart of the assessment, it needs to consider what ‘good’ outcomes for the consumers look like and where consumers could be subject to potential ‘foreseeable harm’. These are ‘buzz’ words in the industry now, but what does this mean in practice?

We believe there is not a ‘one size fits all’ approach for all and firms should be considering the below factors in their implementation approach; considering learnings from the implementation of AoV (Assessment of Value) for UCITs funds over the last few years.

Alpha is already working with numerous firms across sectors to support their implementation of the Consumer Duty. We are also the leading consultancy in supporting firms with the design and implementation of value assessment and integrating these with wider product governance frameworks to meet regulatory requirements in a proportionate and pragmatic way.

If you would like to discuss how we can support you or would like to discuss your firms approach to implementing the new Consumer Duty requirements, particularly in light of the FCA’s recently published report and findings on implementation plans, please get in touch here.