Introduction
On 28 June 2023, the FCA published a reminder article on the upcoming go-live of the Consumer Duty. It posed “10” (well, 14 actually) key questions for firms to consider. We thought it would be useful to map those questions to various sections of the FCA’s Final Guidance on the Consumer Duty.
Table of Readiness Questions
The FCA’s Question | |
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? | See Chapters 6 The products and services outcome and 7 The price and value outcome, specifically 6.80 for questions the FCA may ask.
Also see COBS 2.4
Consider conducting customer research, reviewing customer feedback and monitoring the performance of your products and services. |
Do your products or services have features that could risk harm for groups of customers with characteristics of vulnerability? | See 9.13 Meeting the needs of customers with characteristics of vulnerability
Also see the separate publication FG21/1 Guidance for firms on the fair treatment |
If so, what changes to the design of your products and services are you making? | Consider simplifying the product or service, providingadditionalinformation and providing support. |
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? | See Chapter 7 The price and value outcome and the questions for the Consumer Duty Champion, the Chair and, most likely, the FCA to ask in 10.15 Key questions for firms.
See also 11.11.
Consider reducing prices, improving transparency and providing better customer support. |
What data, MI and other intelligence are you using to monitor the fair value of your products and services on an ongoing basis? | The section entitled “Data and monitoring” starting at 7.44 is useful, specifically 7.50 The types of data/ monitoring firms could use.
Examples are:
Also see 11 Monitoring outcomes. |
How are you testing the effectiveness of your communications? | For a list, see 8.70 Key questions for firms |
How are you acting on these results? | Objective self-assessment is essential here |
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? | See 9.13 Meeting the needs of customers with characteristics of vulnerability
Adaptions listed in the Final Guidance are:
Also see the table in 8.73 |
What assessment have you made about whether your customer support is meeting the needs of customers with characteristics of vulnerability? | See 9.16 for examples of good practice |
What data, MI and customer feedback is being used to support this assessment? | See 11 Monitoring outcomes |
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? | See 9.9 Providing support that meets the needs of customers and 9.10
See 9.54 for the types of questions the FCA may ask |
Do individuals throughout your firm – including those in control and support functions – understand their role and responsibility in delivering the Duty? | See 4.9 which states “Firms should embed a focus of acting to deliver good outcomes in each of their business functions and put customer interests at the heart of their business model and culture” |
Have you identified the key risks to your ability to deliver good outcomes to customers and put appropriate mitigants in place? | Objective self-assessment is essential here |
In Conclusion
These questions and mappings will help firms to reflect on their readiness for the Consumer Duty and identify gaps or areas for improvement. Firms can also expect to be asked questions like these in their interactions with the FCA.
Final question
Do you think your firm runs the risk of being one of the FCA’s Consumer Duty enforcement test cases?
Feel free to reach out to us even if you answered “no” … give us a call if you answered “yes.”
