Two and a half years on: How have Wealth Management firms responded to the Consumer Duty
MoreCall: 0845 139 4444
Email: hello@square4.com
Call: 0845 139 4444
Email: hello@square4.com
The Consumer Duty is the most expansive and far-reaching piece of regulatory change for the last decade.
Firms have been implementing the changes required since July 2022, and the majority of financial services firms still have a way to go before they can claim to be fully compliant. The FCA continues to find shortcomings and have stated that Consumer Duty is “not once and done”. Firms need to be able to demonstrate improvements year-on-year. Not only is change required in the first line, but the oversight, governance, MI and reporting arrangements need to adapt and be effective across the 3LODs, with SMFs clear on their accountabilities and responsibilities for ensuring compliance. Products, services, technology and innovation are constantly evolving, and with that, firms’ Consumer Duty obligations are also.
Understanding Consumer Duty Support
It is imperative that firms keep abreast of their Consumer Duty obligations, and undertake regular review, testing and reporting activity throughout the 3LOD’s. We can supplement or compliment this activity by undertaking third party specialist Consumer Duty ‘health checks’ and assurance, either across the entirety of the firm or on targeted areas. The review scope can be tailored to each individual firm needs as necessary. Following our review, we will deliver a comprehensive report outlining our findings, areas of risk, and our recommendations for improvement so you can be assured to continue meeting your Consumer Duty obligations and mitigate the risk of regulatory scrutiny.
Achieving and evidencing good customer outcomes is the cornerstone of Consumer Duty, and therefore effective outcomes monitoring arrangements is critical. If firms get this right, then they have taken a significant step forward towards meeting the Duty. Effective outcome monitoring needs to effectively harness data across the business, and can prove the key source for firms to evidence Consumer Duty compliance and enable the Board approval in the annual assessment. PRIN 2A.9 covers the FCA’s rules and guidance for monitoring of consumer outcomes for firms.
Service Benefits
How Square 4 can help
Square 4 have been supporting firms dissect, implement, and embed the Consumer Duty throughout their organisations since July 2022, and we have delivered against all aspects of the Duty. We support firms with full programme build and delivery, through to focused project and assurance work on key areas such as Price and Value Assessments, Outcomes Monitoring Frameworks, Governance, Data Analysis, MI and Board Reporting. There isn’t an area of Consumer Duty we haven’t delivered against.
Q. What types of firm have you supported with their Consumer Duty implementation?
A. We’ve supported firms across the retail lending, banking, wealth and pensions sectors implement Consumer Duty. The firms in the retail lending space range from large challenger and digital banks, to credit, mortgage and motor finance providers. In the wealth and pensions sector we have worked with large financial advisers and networks, to large investment managers and boutique asset managers.
Q. What are the areas which firms find most challenging?
A: Firms typically still have significant work to do to develop their data, MI and outcomes monitoring arrangements to enable them to adequately evidence that all customers are receiving good outcomes. Additionally, price and value assessments are based on qualitative views and opinion and lack adequate data analysis to back up conclusions. Firms remain challenged to engrain Consumer Duty into the culture of the business, and current reporting standards do not enable effective governance and decision making.
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