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Consumer Duty 31 July deadline – Grant Thornton reactive comment

“Today, the Consumer Duty, a regulatory framework that aims to enhance consumer protection and transparency in the financial services industry, comes into force. A year has now passed since the final rules and guidelines were published for what is the most significant change in conduct regulation in the last two decades.  Does the work stop now? Hardly. To plagiarise a relevant quote, today is perhaps ‘the end of the beginning’.”

“The Financial Conduct Authority (FCA) has asked boards to answer ten questions to assess their level of compliance with the Duty. Those answers will inevitably drive more work to comply and/or enhance delivery of good outcomes to customers, as will the regulators’ active fact-finding efforts on how firms have complied, and their commitment to taking enforcement action for non-compliance from ‘day one’.”

“The four strands of activity we expect to see from firms now are:

  • Follow through on the implementation actions that weren’t ready for today – high on this list is producing the management information (MI) required to measure good outcomes.
  • Assurance so boards can ‘sleep at night’ as well as formally confirm every year that they comply with the Duty.
  • Closed book actions – the deadline for complying with the Duty on closed books is 31 July 2024.
  • Optimise – the FCA would call this embedding the right practices. It can also mean turning some of the tactical fixes of the past few months into something more robust (‘Consumer Duty by design’).”

“Ultimately, the FCA will measure the industry’s success in applying the Duty, not by the colour coding of its MI dashboards, but by the practical changes it sees firms taking to improve products and services. This will place those businesses that have chosen simply to rebrand their current arrangements as Duty compliant at most risk.”

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