Further to our previous blog on the Consumer Duty implementation plan, which should have been completed at the end of October, we wanted to outline the next steps. If you haven’t completed your implementation plan yet, it is imperative that you do. We can help you catch up the curve, please get in touch.
The next step of the Consumer Duty journey is to implement that plan. LHI Consulting can help with that implementation.
Some high-level points for you to consider.
Your plan must be ‘scrutinised and signed off’ by the Board (or equivalent body) to make sure they are deliverable and robust to meet the new Consumer Duty standards and outline your firm’s plans to embed the Consumer Duty in its business strategy, plans and operational procedures.
In its final rules and guidance, the FCA places an emphasis on evidence and record keeping. Firms need to evidence how they are implementing the Consumer Duty and how you have arrived at various decisions. It won’t be appropriate for you to simply confirm the plan has been implemented. Implementation plans need to focus on actions to be taken and decisions to be made.
By the end of the implementation period, your firm needs to be able to show how it has embedded good outcomes and be able to evidence how customer interests are at the heart of their business model and culture. This ranges from high-level strategic planning to individual customer interactions and includes product and service development, sales and servicing, distribution, support, and risk and control functions, as appropriate.
Customer outcomes are expected by the FCA to be a key lens for areas such as risk and compliance functions.
You may be asked to share implementation plans and related documentation (e.g. board papers and minutes) with the FCA and expect to be challenged on their contents.
As we have outlined previously, you must notify the FCA if you will not be able to complete all work necessary to be compliant with the Consumer Duty before the implementation deadline.
Ongoing senior management oversight
Your firm’s board must oversee the firm’s implementation plans to make sure that:
- They are deliverable and robust
- They remain on track during the implementation period
- Work to review and improve the firm’s products and services is sufficient to meet Consumer Duty standards
The FCA is expecting firms to take ‘positive and proactive’ steps to ensure the requirements are embedded correctly. Boards need to ‘consistently and regularly challenge themselves’ to ensure their actions are compatible with delivering good outcomes.
To achieve the above, Boards must ensure that sufficient resources are available to create and maintain the Consumer Duty framework. This includes both financial and non-financial resources.
Prioritising implementation work
When prioritising implementation work, firms should follow a risk‑based approach and prioritise the areas likely to have the biggest impact on outcomes.
Where actions to bring services up to Consumer Duty standards can be completed quicker than the implementation deadlines, you should do so. If you identify any serious issues causing immediate consumer harm, you should prioritise action in those areas.
Significant breaches of any existing requirements should be reported to the FCA using the existing breach notification process.
If you need short term resource, please LHI Consulting to see how we can help you.
