Guest blog: What is Consumer Duty compliance, and why do I need to take action now?

Guest blog by Recordsure.

Representing the most impactful legislative change in recent years, the Consumer Duty initiative marks a step change in the FCA’s approach to regulating customer safeguarding, supervision and accountability across financial services.

The new regulations raise the bar for firms’ obligations towards their consumers, requiring businesses to place customers’ financial interests and wellbeing at the centre of all decision making – as well as properly evidencing that these aspects are being given due consideration throughout the business lifecycle.

In short, the Duty seeks to move beyond simply ‘Treating Customers Fairly’ and instead create a culture where businesses go the extra mile for their customers and diligently work to help them achieve their financial objectives.

Why is Consumer Duty compliance so critical for FCA-regulated firms?

With the Consumer Duty, the FCA will solidify its shift to an ‘assertive supervision’ model of regulation, in which it intends to be more forceful, proactive and interventionist with its powers – aiming to respond more effectively to emerging concerns before they arise, instead of merely coordinating resolutions after the fact.

The duty’s overarching Consumer Principle mandates firms to ‘act to deliver good outcomes’ for customers, whilst the Cross-Cutting Rules and Four Outcomes set out the FCA’s expectations for behaviour towards consumers and the standards that businesses must strive to achieve, respectively.

But equally significant is the Consumer Duty’s emphasis on a ‘show me, don’t tell me’ approach to regulation, whereby businesses will have to routinely evidence:

  • they’re clear about what constitutes ‘good outcomes’ for their firm
  • good outcomes are being consistently achieved
  • lessons are being learned, and improvements are being made, when they fall short

It’s undeniable that these stringent consumer protection rules will look to ensure vulnerable customers are better protected – however, implementing and sustaining this considerable step up in monitoring requirements is sure to present a challenge for even the most dutiful compliance teams.

For example, how can firms be sure they’re able to identify signs of vulnerability when relying on random sampling checks? And how can they be sure they’re treating the root cause of any inefficiencies, not just the symptoms?

Want to learn more? Join our webinar on 31 October for invaluable insights from the Duty experts – and the opportunity to ask your questions.

Our panel of compliance experts invite all BSA members to attend our exclusive webinar, where we’ll be taking a deep dive into the reasoning behind the FCA's new Consumer Duty and outline what the regulations will mean for your firm’s compliance strategy in practice. We’ll share expert advice on meeting your Consumer Duty oversight and risk monitoring obligations, along with actionable steps you can take to set yourself up for long-term Consumer Duty success. In addition, our panellists will also be happy to answer any burning questions from the attendees. Full details including registration information can be found at the link below.

‘What is Consumer Duty compliance, and why do I need to take action now?’

Driving smarter Consumer Duty compliance with RegTech

In the meantime, download our all-new whitepaper on how post-conversation Compliance Analytics is revolutionising the Duty compliance for QA teams.

Get your guide now

For more information, visit recordsure.com or contact Hana Shackleton, Head of Marketing, Recordsure hana.shackleton@recordsure.com

The views, opinions and positions expressed within guest blogs are those of the authors and do not necessarily represent those of the BSA.