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In the fast-paced realm of investment firms, the first half of 2023 witnessed a flurry of activity as businesses raced against time to align their products and services with the July 2023 Consumer Duty deadline for open products. However, the Financial Conduct Authority (FCA) has been quick to emphasise that the Consumer Duty is far from a ‘once and done’ task. As the deadline for closed products approaches on July 31, 2024, recent polls from an FCA webinar reveal that 61% of firms feel confident they're on the right track.

Those 61% of firms may have maintained momentum by diligently implementing the Consumer Duty, ensuring that internal projects are well underway to identify and rectify any potential risks within their closed book of business. Yet, like any significant regulatory initiative, the Consumer Duty implementation journey has not been without its share of challenges.

For instance, asset managers primarily catering to professional clients have faced the task of assessing whether their products and financial promotions could potentially reach retail clients. This necessitates enhancements to the entire product governance framework and comprehensive upskilling and training for both first and second-line teams – undoubtedly, a steep learning curve.

Key Insights for Compliance Officers:

1. Continuous Engagement: Recognise that the Consumer Duty is an ongoing journey, not a ‘once and done’ task. Whilst the Board is ultimately responsible for the implementation and ongoing adherence to the Consumer Duty, Compliance can support the Board by helping to embed this message across all business facets and incorporate the Consumer Duty within second line monitoring plans.
2. Consumer Duty Board Report: Prepare for the mandatory, annual, Consumer Duty Board Report due in July 2024. Ensure that ongoing customer outcomes monitoring from both the first and second lines informs this report, empowering boards with the necessary data and management information to effectively challenge the business.
3. Prioritise Due Diligence: Elevate the importance of Consumer Duty related documentation in Mergers & Acquisitions (M&A) and other due diligence reviews, such as outsourcing. Specifically, focus on policies and procedures related to vulnerable customers to ensure comprehensive compliance.
4. Focus on Risk: Concentrate efforts on higher-risk products and known issues, particularly for closed products. Evaluate areas such as customer support, historically of lesser priority, to ensure parity with the standard of service provided for open products.
5. Client Money Permissions: For firms with client money permissions, review the December 2023 Dear CEO letter targeting platform firms and SIPP operators. Even if not directly impacted, understanding themes around client money interest retention is invaluable for any firm holding client money affected by the Consumer Duty.
6. Tap into Resources: Explore Thistle Initiatives' previous insights on the Consumer Duty for additional guidance. Additionally, if you're seeking a Consumer Duty Board Report template, look no further – we can assist. Let's navigate the complexities of Consumer Duty together, ensuring robust compliance and sustainable business practices.

Author: Karishma Galaiya

How can we help you? 

Thistle Initiatives has supported firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting firms as-and-when, our team of specialists can serve as your right hand in meeting and complying with FCA regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.

We can help you with:

• Carrying out an independent review of your Consumer Duty arrangements
• Consumer Duty Board Report template and support
• Board & Senior Management training

Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to info@thistleinitiatives.co.uk.