There is less than a month to go until firms need to have implemented the new rules. After its most recent review of implementation plans, the Financial Conduct Authority (FCA) has reported that “some firms may be further behind in their thinking and planning for the duty. This brings a risk that they may not be ready in time, or they may struggle to embed the duty effectively throughout their business.”
After participating in the recent City & Financial Consumer Duty Implementation Summit, where Worksmart was honoured to be a sponsor, it became evident how enthusiastic and willing the multitude of financial institutions, legal firms, consultancies, trade body organisations, and suppliers like us were to provide practical guidance and share insights on how to achieve positive outcomes for consumers at every stage, There were several brilliant sessions where a series of questions formed the basis of the panel discussions. Here is a small slice of the action from the day.
To what extent will the new Consumer Duty change the culture in financial services to make firms more customer focused?
Much of the summit revolved around the question of responsibility and what actions we should be taking. One of the key discussions focused on the meaning of “doing the right thing” for our customers. Under the overarching theme of how the new Consumer Duty will impact the financial services culture, the question arises: will this shift make firms more customer-focused?
With the Consumer Duty raising expectations, it becomes crucial for firms to establish and maintain the right culture to successfully implement and comply with regulatory standards. Defining culture is a complex task, as recognized by the FCA, with no single definition of “good culture”. Each firm will need to chart its own path based on its core purpose, values, customer base, and business model. As Andrew Bailey, the former Chief Executive of the FCA, once stated, culture is “everywhere and nowhere”. In essence, culture encompasses a set of values and standards that shape attitudes, behaviours, and thinking within an organization, guided by both written and unwritten rules. By rewarding behaviours and actions that align with the desired culture, a positive culture will flourish, while neglecting to do so will weaken it and potentially lead to a detrimental shift in culture.
During the panel discussions, many participants shared similar views on how culture operates within their firms. The majority expressed concerns that the Consumer Duty may not have been designed with every type of firm and its unique culture in mind, which could pose challenges in ensuring positive outcomes and adherence to the guidelines. However, there was also recognition of the opportunity that the Consumer Duty presents for firms to engage in self-reflection and enforce a culture of self-discipline for the betterment of their colleagues’ work practices.
Embedding a consumer duty compliant culture right across your organisation
At Worksmart we are experts in providing RegTech solutions for handling consumer complaints and as such it can seamlessly be used to help firms to be compliant to the requirements for complaints processing. This subject created a lively discussion during the summit where the panel reflected on the ways CD has helped them to really focus on this and all their procedures, and what the enhanced expectations will be under the Duty.
Firms should already have well-established procedures in place for handling complaints. However, the introduction of CD is expected to raise the bar for firms, with the FCA having a means to hold them accountable if they fail to meet expectations. The Duty will expand the requirements for firms, potentially necessitating improvements to their current processes. The summit audience actively contributed to the discussion, with some realizing that they hadn’t initially considered the impact of CD on their complaint’s procedures. This revelation was certainly eye-opening and added tremendous value to the conversation.
An additional thing for firms to think about is the necessity for them to be reviewing current MI to ensure it provides proper insight and will be able to identify relevant trends considering the higher standards expected under the Duty. The FCA expects firms to review relevant sources of data to assess whether the outcomes experienced by their customers match the obligations expected of them under the Duty. This CD really is serious stuff.
How great a risk does crypto pose to consumers and what can be done to protect them?
Finally, a little left field, but none the less interesting was a discussion around how crypto *(currently largely unregulated) can pose a risk to consumers. This was by far the most animated conversation of the day and included a speaker in the audience who was a ‘fin-fluencer’ and advises investors on places where they can go to increase their chances of making a profit using crypto. The funny thing was that when she was asked if it was safe or prudent to invest in crypto, she actually said no not really!!! However, she did include a kind of caveat to say there is so much misinformation that floats around about how and why to use cryptocurrencies and how to invest, that many people fall foul of the vast number of scams currently doing the circuit.
Which leads me, along with others attending on the day, to believe that there most definitely needs to be more information, regulation and understanding of the crypto world especially since one of the panellists stated crypto is not going anywhere soon. In fact, the FCA remains cautious and stated that firms marketing crypto assets to UK consumers will need to introduce a cooling-off period for first time investors from 8 October 2023, under new advertising rules.
Sheldon Mills, Executive Director, Consumers and Competition, said:
‘It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice. Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.’
So, whilst the FCA is not necessarily regulating crypto activity it most definitely is keeping a close eye on how investing and using it has an effect on consumers.
*The safest way to buy Bitcoin and other cryptocurrencies is to do your research into which forms are regulated by the FCA
So, to sum up the entire day – really informative and definitely a must-attend summit as I came out much more knowledgeable about how firms are coping with their readiness for CD and how RegTech can play a huge part in helping to ensure they stay compliant after the July deadline passes!
For more information on how Worksmart could help you and your firm through the challenges that CD has presented, reach out to our team of experts at email@example.com or book a meeting to find out how the latest RegTech can help you navigate the Consumer Duty.