The Consumer Duty comes into force on 31 July for new and existing products and services that are open for sale or renewal. The implementation of the Consumer Duty signifies a significant shift in expectations for firms, aiming to ensure higher standards in the provision of products and services. While many firms are diligently working towards meeting the new requirements, some still have work to do before the deadline. To ensure compliance and maximize the remaining time, firms need to ask themselves the right questions. The Financial Conduct Authority (FCA) has provided 10 suggested questions for firms to consider as they embed the Consumer Duty. In this article, we highlight these 10 key questions that firms should explore before the imminent deadline.
10 key questions for firms to consider:
1. Are you satisfied your products and services are well designed to meet the needs of consumers in the target market, and perform as expected? What testing has been conducted?
Ensuring that your products and services are designed to meet the needs of consumers in your target market is crucial. Assess the design and functionality of your offerings and consider conducting rigorous testing to validate their performance. By doing so, you can identify any areas that require improvement to enhance consumer satisfaction and minimize risks.
2. Do your products or services have features that could risk harm for groups of customers with characteristics of vulnerability? If so, what changes to the design of your products and services are you making?
Take a comprehensive look at your products and services to identify any features that may potentially harm vulnerable customer groups. If such features exist, develop strategies to modify or remove them. Prioritise consumer safety and ensure your offerings are inclusive and accessible to all customers.
3. What action have you taken as a result of your fair value assessments, and how are you ensuring this action is effective in improving consumer outcomes?
Perform fair value assessments to determine whether your products and services offer fair value to consumers. Once you have identified any shortcomings, take appropriate action to rectify them. Continuously monitor the effectiveness of these actions in improving consumer outcomes, making necessary adjustments when required.
4. What data, management information (MI) and other intelligence are you using to monitor the fair value of your products and services on an ongoing basis?
Implement a robust system to gather data, MI, and other intelligence that will allow you to monitor the fair value of your products and services continuously. This information will enable you to make informed decisions and promptly address any discrepancies to ensure consumer satisfaction.
5. How are you testing the effectiveness of your communications? How are you acting on the results?
Evaluate the effectiveness of your communication strategies by conducting regular testing. This includes assessing whether your messages are clear, easily understandable, and resonate with your target audience. Act upon the feedback obtained from these tests to refine and improve your communication methods.
6. How do you adapt your communications to meet the needs of customers with characteristics of vulnerability, and how do you know these adaptions are effective?
Recognise the unique needs and characteristics of vulnerable customers and adapt your communications accordingly. Develop strategies to ensure your messages are accessible, inclusive, and considerate of their specific requirements. Continuously measure the effectiveness of these adaptations through feedback and data analysis.
7. What assessment have you made about whether your customer support is meeting the needs of customers with characteristics of vulnerability? What data, MI and customer feedback is being used to support this assessment?
Assess whether your customer support adequately addresses the needs of vulnerable customers. Utilize data, MI, and customer feedback to gain insights into the effectiveness of your support systems. This will help you identify areas that require improvement and provide a better customer experience.
8. How have you satisfied yourself that the quality and availability of any post-sale support you have is as good as your pre-sale support?
Evaluate and compare the quality and availability of your post-sale support with your pre-sale support. Ensure that customers receive consistent levels of assistance and service throughout their journey with your firm. Identify any discrepancies and implement measures to bridge the gaps, delivering a seamless experience to customers.
9. Do individuals throughout your firm – including those in control and support functions – understand their role and responsibility in delivering the Duty?
Ensure that all employees, including those in control and support functions, have a clear understanding of their roles and responsibilities in delivering the Consumer Duty. Promote a culture of compliance and provide necessary training and guidance to empower individuals to fulfil their obligations effectively.
10. Have you identified the key risks to your ability to deliver good outcomes to customers and put appropriate mitigants in place?
Identify and assess potential risks that could hinder your ability to provide favourable outcomes to customers. Develop and implement suitable mitigating measures to address these risks effectively. Regularly review and update your risk management strategies to stay ahead of potential challenges.
Key Findings from the Spring 2023 Consumer Duty Firm Survey
The FCA commissioned a survey of 1,230 firms within the sectors covered by the Consumer Duty to assess their preparedness for the July 31, 2023 implementation deadline. The findings revealed high levels of engagement and understanding among the surveyed firms, with 64% expecting full compliance by the deadline and an additional 23% complying with most requirements but requiring some remaining work.
Retail finance providers and debt advice firms showed lower levels of engagement, prompting the FCA to provide targeted support and communication. Firms expressed appreciation for the FCA’s assistance but desired more information on outcomes monitoring and the price/value outcome. The FCA responded by publishing a fair value assessment review and a podcast on post-implementation outcome monitoring. These findings emphasise the progress made by firms while highlighting the importance of leveraging FCA resources for full compliance with the Consumer Duty.
How Neopay can help
As the Consumer Duty deadline approaches, it is imperative for firms to evaluate their compliance efforts and ensure they meet the required standards. By considering the 10 key questions highlighted in this article, firms can reflect on their implementation of the Consumer Duty and identify areas for improvement.
Neopay is your trusted partner for navigating the complexities of the Consumer Duty. We offer facilitated workshops to help firms define their reviews and identify gaps in their implementation, ensuring compliance with regulatory requirements. Our team provides expert advice and support throughout the entire Consumer Duty journey.
With Neopay, you can benefit from tailored solutions designed to meet your specific needs. We help you establish effective review processes, implement best practices, and ensure your firm delivers value to customers while remaining compliant. Contact us today to learn more about our services and how we can support your Consumer Duty implementation.
For everything you need to know about the Duty and the requirements for your business, check out our dedicated FCA Consumer Duty section for the latest updates.