The Consumer Duty is a new regulatory framework that will come into force in July 2023. It will replace the existing Principles for Business, and it will place a greater emphasis on firms putting the consumer first.
At Cityplus Network, we are committed to helping our firms comply with the Consumer Duty. We understand that this is a significant change, but we also believe that it is an opportunity for firms to demonstrate their commitment to putting the customer first.
THE FOUR OUTCOMES OF CONSUMER DUTY
The Consumer Duty principle isn’t just a basic outline for firms to follow with no real intent. The four areas are:
Products and Services: Firms must be able to demonstrate that their products and services are targeted to the specific demographic of their target market. This means that the entire life cycle of the product or service, from development to marketing to sales, must be aligned with the needs and preferences of the target demographic.
Price and Value: Firms must be able to clearly communicate the value of their products and services to consumers. This includes providing clear and concise information about the features and benefits of the product or service, as well as the price. Any price changes must be implemented in a way that is transparent to consumers and that does not disadvantage them.
Consumer Understanding: Firms must be able to understand the needs and preferences of their target demographic. This includes understanding how consumers make decisions about products and services, as well as the factors that influence their purchase decisions. Firms must also be able to communicate effectively with consumers in a way that is tailored to their needs and preferences.
Consumer Support: Firms must be able to provide support to consumers after the sale. This includes providing clear and concise information about the product or service, as well as answering questions and resolving problems. Firms must also be able to provide support in a way that is convenient for consumers.
The Financial Conduct Authority (FCA) is committed to protecting consumers from firms that do not put their customers' interests first. The FCA will enforce the Consumer Duty through a variety of measures, including:
Supervision: The FCA will supervise firms to ensure that they are complying with the Consumer Duty. This includes conducting inspections, reviewing firms' products and services, and monitoring firms' communications with consumers.
Enforcement: The FCA will take enforcement action against firms that breach the Consumer Duty. This may include fines, public censure, or even the withdrawal of a firm's license to operate.
Education and guidance: The FCA will provide education and guidance to firms to help them understand and comply with the Consumer Duty. This includes publishing guidance on the Consumer Duty, providing training to firms, and holding workshops and seminars.
The FCA has stated that its approach to enforcement will be proportionate to the harm caused to consumers. This means that firms that cause more harm will face more severe consequences. The FCA will also focus on outcomes, meaning that it will seek to ensure that consumers are compensated for any harm that they have suffered.
The FCA's commitment to enforcing the Consumer Duty is a significant step forward in protecting consumers. By taking a tough stance on firms that do not comply with the Consumer Duty, the FCA will help to ensure that consumers are treated fairly and that they receive the products and services that they need.
Here are some tips on how to minimise the impacts of the Consumer Duty on your firm:
Get clear on your principles. What do you believe in? What are your values? Once you have a clear understanding of your principles, you can use them to guide your decision-making.
Build a strong compliance framework. This will help you to identify and manage the risks associated with the Consumer Duty. It will also help you to demonstrate to the FCA that you are taking the duty seriously. Cityplus help firms with their compliance framework
Engage with your customers. Get their feedback on your products and services, and be transparent about your fees and charges. By listening to your customers, you can make sure that your products and services are meeting their needs.
Transparency: Liaise with your network about what MI you should be recording as firms and also what the network expect of you for consumer duty.
At Cityplus Network, we offer a range of services to help firms comply with the Consumer Duty. We can help you to:
Assess your current practices and identify any areas where you need to make changes.
Develop a strong compliance framework.
Engage with your customers and get their feedback.
Train your staff on the Consumer Duty.
Monitor your compliance with the Consumer Duty on an ongoing basis.
We understand that the Consumer Duty is a significant change, but we are here to help you through it.
Contact us today to learn more about how we can help your firm comply with the Consumer Duty.
Here are some additional tips for minimising the impacts of the Consumer Duty:
Use data to understand your customers. The Consumer Duty requires firms to understand the needs of their customers. This means using data to track customer behavior and preferences.
Be proactive. Don't wait for problems to happen. Be proactive in identifying and addressing potential risks.
Be transparent. Be open and honest with your customers about your products and services. This will help to build trust and credibility.
Be accountable. Take responsibility for your actions and be prepared to put things right if things go wrong.
We believe that the Consumer Duty is an opportunity for firms to improve their practices and build stronger relationships with their customers. By following these tips, firms can minimize the impacts of the Consumer Duty and emerge from this period stronger than ever before.
Contact Cityplus Network today to learn more about how we can help your firm comply with the Consumer Duty.