It doesn’t end here: Consumer Duty homework for the summer

We are just one weekend away from the Consumer Duty deadline, where firms will need to comply with the new regulations.

While many firms have undergone exemplary work, our data has still been showing issues around key areas, such as:

• Value for money
• Status quo bias
• Measurement of good client outcomes on an ongoing basis
• Identifying, monitoring and reporting on client data
• Gap analysis and remedy
• Outsourced third-party research and due diligence strategies
• Training and competence strategies
• Granular risk management strategies and action tracking

As we move from implementation to validation, advice firms should not get complacent.

All firms should use the summer months to re-assess their work and employ a benchmarking strategy to ensure they are in the best position should the Financial Conduct Authority come knocking.

I would recommend firms do the following:

1. Ensure executive ownership and board oversight is embedded with clear scrutiny strategies and robust risk and audit activities at regular intervals across the Duty’s framework.
2. Ensure clear training and competence alignment, embedded across the firm’s people development structures, cultural purpose and value/mission statements.
3. Re-assess project management to ensure appropriate resources remain committed and work is prioritised based on ongoing client outcome assessments.
4. Ensure the distribution chain research and due diligence process and management information is robust, and any outsourced third parties have:
   1. Clear agreements and client communications
   2. Key performance and risk indicators
   3. Clear costs and charges
   4. Strong financial stability
   5. Support suitable for clients’ investment/retirement propositions
   6. Matched segmented client needs, including vulnerabilities
5. Ensure the Duty’s four outcomes gap analysis is constantly addressed and value for money strategy is in place.
6. Ensure client data quality is reviewed, gaps identified and remedied.
7. Ensure methods for reporting on client data are embedded to support good outcomes.

Firms must now ensure they revisit all good work completed, constantly calibrating this against the Consumer Duty regulations and placing evidence-based practice at the heart of all they do.

Chris Davies is founder and chief executive of Model Office