The July Consumer Duty deadline is fast approaching, and many firms are yet to comply with FCA requirements. But although you need to act, you don’t need to rush.
A patchwork approach to Consumer Duty compliance might get you over the line for July, but – as we’ve seen with other major regulations like GDPR – will cost you time, energy and money in the long run.
In this blog, we’ll outline how to take a considered approach to getting everything in order.
Consumer Duty: a reminder
The Consumer Duty is a set of regulations aimed at enhancing consumer protection in the digital marketplace. It places an obligation on businesses to act in the best interests of their customers and requires them to provide transparent and fair services. The objective is to mitigate the risks consumers face, such as misaligned incentives, biased algorithms and unfair practices.
To demonstrate compliance, businesses need to review everything from their product suite to their communications to end-to-end customer journeys – and clearly show they’re not just mitigating risk, they’re actively promoting positive outcomes for customers.
The FCA has been clear that it will take an ‘assertive’ approach to firms’ implementation of the new rules. Therefore, it’s crucial that you prioritise implementation based on risk – and focus particular attention on documentation, governance and accountability.
Drafting implementation plans
By now, most firms will have conducted analyses highlighting where harm is most likely to occur.
However, the next step isn’t to rush head-first into changing policies and processes. Instead, you need to document implementation plans carefully and accurately. These plans should:
- Be thorough
- Involve senior stakeholders at every stage
- Be based on robust data
Though smaller firms won’t be expected to create plans as detailed as larger ones, all implementation plans should cover the full scope of changes needed to achieve compliance. That includes:
- Technical documentation
- Staff training plans
- Key actions
- Project milestones
Prioritising key areas
The FCA’s guidance highlights 3 key focus areas, giving firms a clear steer on tackling implementation.
- Prioritise based on risk – You should tackle the riskiest and most complex products/journeys first to achieve the maximum amount of harm reduction possible by the deadline
- Consider how to fully embed Consumer Duty into the organisation – It’s not enough to produce high-level technical plans. The spirit of the regulation needs to run through the whole organisation, from tech to data to customer service.
- Collaboration is key – True compliance requires firms to understand and mitigate risks throughout their whole supply chain and distribution process. This means engaging with third parties to understand how they’re achieving compliance, too.
Assurance and accountability
With Consumer Duty, the burden of proof lies with firms themselves. It’s not enough to be compliant – you have to prove your compliance and actively monitor the effectiveness of your procedures.
This means independent oversight is vital, and senior managers will have to account for any failures.
Data is at the heart of Consumer Duty compliance
To achieve compliance, you need to know what your customers are experiencing at every step of their journey.
At Engage Hub, we can help you orchestrate data from all your disparate systems to give you a single version of customer truth – without changing your underlying technology stack. Our expert teams can guide you through the compliance process and independently review your implementation plans to make sure they’re robust enough to meet FCA standards.