Consumer Duty

The Consumer Duty is the next evolution of the Financial Conduct Authority’s (FCA) Conduct Risk agenda which sets a higher standard of consumer protection in retail financial markets. It introduces a new Principle for Business, Principle 12, which states that firms should act to deliver good outcomes for retail customers.

The Consumer Duty is in addition to the work the FCA has done and the Finalised Guidance it has issued on the Fair Treatment of Vulnerable Customers. Vulnerable Customers, and their particular needs, should be considered as part of the overall approach a firm takes to the Consumer Duty.

The Consumer Duty is being implemented during a period where firms are focusing on strategic transformation and looking for more innovative ways to compete on their way to digitalisation. Business Models have evolved as a result of the pandemic which customers choosing to engage with financial services in more non face to face channels. The Financial Conduct Authority (FCA) is also shifting its approach to become more responsive to the current needs of the market by being more proactive, forward-looking, and innovative while leveraging the power of data.

Protiviti’s breadth of experience in dealing with regulatory requirements together with our blend of technology, data, and analytics capabilities makes us the ideal partner to assist you.

Even if an organisation thinks it is already providing customers with good outcomes, the Consumer Duty requirements represent a step change that every firm should be looking to take. It is essential to assess customer journeys and product and service lifecycles in order to identify the outcomes you want to deliver for your customers.

Protiviti can provide subject matter experts to conduct a gap analysis which assesses your approach to the Consumer Duty and assist you in developing approach to comply with the three cross cutting rules and four outcomes introduced.

We understand the FCA Handbook and its principles, our team has extensive experience of assisting firms with outcomes and customer focused change programmes.

We can support you through this journey while providing interactive, facilitated working sessions designed to help you look at old problems in new ways and design innovative solutions.

Strategy and Business Model

The Consumer Duty should be embedded across all levels of the firm and align with the broader strategy. It should be a key consideration when it comes to making decisions that impact customers. It is essential to set up a business model which delivers good outcomes along with policies and processes that support the delivery of an accessible and fair customer journey and delivers products and services that customers understand, want and need.

Protiviti can help you shape a strategy and business model unique to your organisation, aligned to you target market and which recognises any characteristics of vulnerability that may be apparent in your customer base. Protiviti can also design a framework that enables you to articulate what good outcomes mean for your firm so that appropriate and relevant monitoring and evidence can be gathered.

While each firm’s strategy and business model is unique our standard approach will be to work with you to identify the typical risks inherent in your business to the delivery of good customer outcomes. This will then enable an identification and definition of fair outcomes to be delivered and a control framework to be established that focuses on assurance and continuous monitoring of the delivery of good customer outcomes.

Product and Service Lifecycles and Customer Journeys

Delivering consistent and good customer outcomes is key to ensuring compliance with the requirements of the Consumer Duty. You need to ensure that product and service lifecycles are fair, continuously reviewed and improved and evidenced to provide your customers with good outcomes. Biases and sludge practices should not be acting as a barrier to the outcomes customers receive. When developing new products and services and designing new business processes it is essential to document, test and explore any considerations undertaken to avoid any potential harm.

Protiviti can bring innovation to process design which will enable you to support your customers in the right way as well as obtaining efficiency in the operational delivery and capability. We can help you harness technology to improve customer journeys and enable you to evidence your customer outcomes delivery approach. Through this approach, Protiviti will assist in revamping the approach to Product Governance to ensure it is ready for the Consumer Duty, including in relation to fair value, pricing, durability, fitness of products and services and distribution chains. Alternatively we can apply our approach to Product Governance to your current process, which will enable us to benchmark your current position against your competitors and regulatory expectations and identify any areas for enhancement and improvement. Products and services deliver the customer experience on an ongoing basis so these need to be central to any effective Consumer Duty, Conduct Risk and Vulnerable Customers approach.

Defining and Measuring Customer Outcomes

A critical part of the Consumer Duty is that firms need to be are able to monitor, assess, test, understand, and evidence customer outcomes. There are many forms that this can take but the right data needs to be gathered and utilised so that appropriate Governance can consider the outcomes that you are delivering for your customers and make changes or improvements to these if required.

This is not a new area in some senses as firms have been required to consider and gather information in relation to their approach Treating Customers Fairly and Conduct Risk for many years. However, many firms have historically struggled to demonstrate that the information collected is relevant, timely, accurate and considered and acted upon where relevant.

Protiviti has considerable experience of working with firms on the design and implementation of appropriate frameworks to demonstrate the outcomes customers are receiving. We can support you in the design of a framework if required or through an assessment of the current reporting and governance mechanisms with a view to providing a benchmark on the current approach against regulatory expectations and the identification of areas for improvement. A robust reporting and governance approach should not be static and there are always areas for improvement or enhancement.

Our Approach

Principals-based approach to regulatory implementation and assurance is applied to firms and individuals

Protiviti has a team of experts who bring a wealth of experience from roles at the UK regulators, in Compliance roles and from assisting our clients with their Consumer Duty obligations. We can assist you in reviewing or developing the required implementation and delivery approaches. We tailor our approach to the strategy, business model and needs of each firm. We approach regulatory implementation and assurance work through a principles-based lens focusing on firm and individual conduct.

We will work with you to define what good outcomes mean for your firm, prioritise a list of your products and services that could pose the greatest harm, assess policies and procedures, ensure effective understanding, oversight, and accountability, and identify key data to ensure monitoring requirements are met and customer outcomes can be evidenced.

Principals-based approach to regulatory implementation and assurance is applied to firms and individuals

Leadership

Bernadine Reese

Bernadine is a Managing Director within our Financial Services Industry (FSI) Regulatory practice in the UK. Prior to joining Protiviti ten years ago, Bernadine was a Director in KPMG’s Regulatory Services practice. A chartered accountant by training, Bernadine has over ...

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