ABOUT: An in-depth analysis of the initial three-month implementation of the FCA’s Consumer Duty rules, highlighting challenges and areas for improvement.
LINK: https://www.linkedin.com/pulse/consumer-duty-3-months-frank-brown-ke54e/
Summary This article delves into the first three months following the enactment of the Financial Conduct Authority’s (FCA) Consumer Duty rules in July 2023. It discusses the immediate use of new powers by the FCA, including mandates for banks to pass on interest rates to savers. The article highlights the slow adoption of these rules by firms across various sectors and identifies consistent areas of struggle, such as governance, monitoring, and oversight. Furthermore, it touches on the challenges in implementing cross-cutting rules, a key focus of the FCA.
Key Points and Ideas
- The FCA implemented Consumer Duty rules three months ago, swiftly exercising new powers.
- Banks and building societies were required to pass on interest rates to savers.
- Many firms are slow to adopt Consumer Duty rules and still have significant work to do.
- There are common struggles in governance, monitoring, and oversight.
- Firms fail to demonstrate sufficient information gathering to assess customer outcomes.
- Cross-cutting rules are a major challenge, with many firms not paying enough attention to them.
- The FCA favors enforcing cross-cutting rules, as they are easier to implement than principles.
- Product and service outcome, price and value outcome, consumer understanding outcome, and consumer support outcome are key areas of focus.
- Cultural shift and alignment with Consumer Duty are essential for successful implementation.
- Firms need to reassess their approach to Consumer Duty and customer outcomes.
Key Statistics
- Three months since the Consumer Duty rules came into effect.
- 28 months since the release of CP21/12, a fundamental guide for firms in this transition.
- Initial quick actions by the FCA on day one of the rule implementation.
- Multiple sectors showing common failings in implementing cross-cutting rules.
Key Takeaways
- Firms must prioritize the adoption and understanding of Consumer Duty rules.
- Effective governance, monitoring, and oversight are crucial for compliance.
- Attention to cross-cutting rules is essential for meeting the FCA’s expectations.
- Understanding and embedding Consumer Duty in all aspects of operation is vital.
- Firms should continuously reassess and improve their approaches to ensure alignment with Consumer Duty.
- The implementation of Consumer Duty requires a holistic approach, considering all aspects of customer service and product value.
- Cultural shifts within organizations are necessary to fully align with Consumer Duty requirements.
- Regular monitoring and updating of strategies and internal processes are necessary for compliance.
- Firms should be proactive in understanding and acting on the requirements of Consumer Duty.
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