What will the FCA’s proposed new Consumer Duty mean for you? 

The FCA has now completed its consultation period for its new ‘Consumer Duty’ for financial services firms and is expected to produce its final rules by the end of July 2022.

The aim of the Consumer Duty, which was first proposed in May 2021, is to improve the standard of care firms provide for its consumers. The FCA says firms need to move from a reactive response to regulatory requirements to being more proactive and take all reasonable steps to ensure their products and services actually meet the needs of those they are sold to.

The FCA’s proposed new Consumer Duty will mean:

  • A new consumer Principle that will replace Principles 6 (Customers’ best interests) and 7 (Communications with clients) for retail businesses and require firms to act to deliver good outcomes for retail customers. With the new Principle, the FCA confirms “A firm must act to deliver good outcomes for retail clients”.
  • Cross-cutting rules that set out how firms should act to deliver good outcomes and provide greater clarity on the FCA’s expectations under the new Principle.
  • Rules relating to the four outcomes that the FCA wants to see under the consumer duty. These represent key elements of the firm-consumer relationship that are instrumental in helping to drive good outcomes for customers.

The Consumer Duty could potentially be a radical change in how some firms operate, with significant time and resources needed to be implemented. Every step of the customer journey throughout the product life cycle will have to be considered and assessed, including design, communications, and customer service which may cause harm to the customer.

Internal governance procedures will need to be reviewed and amended. Customer outcomes will need to be monitored. Customer service may need to be re-thought, and firms should review their complaints handling processes to ensure any potential problems are identified.

Following the FCA’s second consultation, final rules are expected by 29 July, with full implementation proposed by 30 April 2023. The FCA acknowledges that many firms are already delivering good outcomes for consumers. However, others will require significant focus in order to meet the deadline. The path to compliance will require all firms to undertake detailed documentation and monitoring of all decisions made together with recommended actions. Management should also give careful consideration to the increased costs involved with compliance and potential impact on profitability.

How ComplyPortal can help

  • Ensure all staff are aware and acknowledge changes in your policies and procedures.
  • Put in place approval processes for registers, such as Complaint management.
  • Document your monitoring activities and provide an auditable record of your compliance.
  • Long term, this is not the only change that will occur. ComplyPortal is a centralised platform that can grow with changes to help you manage your monitoring processes and better meet your compliance monitoring obligations.

“The FCA clearly has an expectation that firms will take a robust approach to ensuring they are meeting clients needs across the board. Our services will ensure firms are in a good position to document and track how you are meeting the new regulatory requirements.”

Luis Parra, Managing Director – ComplyPortal

Find out more about how the ComplyPortal platform can help firms adapt to new regulatory expectations at: https://complyportal.uk/modules

About ComplyPortal:

First developed in 2011 by compliance professionals for compliance officers, ComplyPortal offers workflow, automation, and several modules to help firms with control and regulatory compliance monitoring.

ComplyPortal simplifies financial services regulatory compliance management on an easy-to-use cloud-based comprehensive compliance platform. It enables compliance officers, risk officers and senior management to keep track of their firm’s regulatory responsibilities and workflows. Our platform includes the following modules, among others:

  • Monitoring: a year-round schedule pre-populated with monitoring questionnaires to ease compliance processes.
  • Registers: lists controlled by the Compliance officer, but easy for staff to view.
  • Risk: map and control risk areas to effectively identify and manage risk for your firm.
  • eKYC solution: perform comprehensive searches, including client identity verification, document authenticity, and more for a comprehensive KYC and AML approach