CONSUMER DUTY

Next steps...

Have a Day Two plan in place. A costed and robust Day Two plan should demonstrate the firm’s intent to be fully compliant and embed Consumer Duty into day-to-day operations - e.g. technology, data enhancements and cultural change. The FCA recognises that firms will have longer term strategies to monitor outcomes and enable annual attestation of compliance. Firms should consider the FCA’s advice on data and management information as set out in their outcomes monitoring podcast

Facilitate training at all levels. The importance of a shift in mindset to focus on consumer outcomes has been highlighted by the FCA. Bespoke Consumer Duty training for specific roles will enable a better understanding of the requirements and responsibilities each employee has in delivering good outcomes. Consumer support will be key, especially for consumers with vulnerable characteristics. Staff should be equipped with training and tools so they can provide adequate support and signpost help where needed.

Culture, governance and accountability are key. The FCA expects a positive culture to be continually reinforced by senior management and cascaded through the firm. Boards need to demonstrate they have addressed the four key drivers of culture (purpose, leadership, people policies and governance) through the lens of the

Don’t lose momentum. With ongoing refinement and improvement in approach a core tenet of the Duty, firms should continually test and monitor all communication channels to ensure they meet FCA expectations (e.g. making key points easy to understand, use of layering, simplifying communications for vulnerable consumers) as well as outcomes monitoring requirements. Firms should implement mitigation strategies to address key risks to delivering good outcomes. Ensure your actions are aligned to the obligations as set out in the finalised guidance - providing fair value to different groups of retail customers is central to the FCA’s rules.

Consumer Duty. The Board has to demonstrate that the firm has given serious consideration to the Duty and addressed the requirements within the context of their business models and customer journeys. Ultimate responsibility lies with the Board –ensure the 10 key questions for firms to consider that the FCA highlighted can be adequately addressed.

Embed the Duty. Implementing Consumer Duty is not just about compliance and operational changes, it is also about culture and embedding a consumer-centric focus across all aspects of the company and in employees’ mindsets. Firms can expect at every stage of the regulatory lifecycle to be asked to demonstrate how their business model, the actions they have taken, and their culture are focused on delivering good customer outcomes. The focus for firms on delivering good outcomes is expected to be central to a firm's strategy and embedded throughout the business in the same way as financial performance or risk.

Financial Lives survey highlights importance of the FCA’s Consumer Duty

The FCA have released the results of their Financial Lives survey. Findings include;

• 7.4 million people unsuccessfully attempted to contact one or more of their financial services providers in the 12 months before May 2022, with the most vulnerable in society most likely to struggle with this.

• Less than half of UK adults, or 21.9 million people, had confidence in the UK financial services industry and just 36% agreed that most financial firms are honest and transparent in the way they treat them, although a more positive picture emerged when people were asked to rate their own provider rather than the sector in general.

The Duty comes into force today for all new and existing products and services. From this point firms will need to make sure, and be able to show, that they are acting to deliver good customer outcomes.

The full press release is available here

Consumer Duty is here

As of today - 31 July - the new Consumer Duty rules for new and existing products and services come into force.

In a new video, available here, PIMFA’s Director of Government Relations and Policy, David Ostojitsch, emphasises the importance of maintaining momentum to embed best practices and a culture of delivering good consumer outcomes.

Financial Advice Business Benchmarks

PIMFA has partnered with the Chartered Institute for Securities & Investment (CISI) and Nextwealth to create the Financial Advice Business Benchmarks survey for 2023.

This is your opportunity to share what is changing across financial advice businesses and we would encourage you to fill out the survey, which should take between 20-30 minutes to complete and can be returned to across different sessions – your progress will be saved along the way.

A link to the survey can be found here and all participants will receive a free copy of the report.

PIMFA launches the CASS Clients Academy, sponsored by Ruleguard

Research shows that firms continue to fall foul of time-consuming and expensive CASS audits, and even those firms with a mature understanding of the CASS rules aren't immune to escalating CASS audit fees. The problem often isn't with knowing the CASS rules - many strategies are well understood - but with execution and application.

The PIMFA CASS Clients Academy (CCA), sponsored by Ruleguard, is a unique learning experience for member firms who, not content to simply keep up with CASS requirements, seek to expand their knowledge and strengthen their internal capabilities to arrest rising CASS audit fees and ensure the number of incidences and breaches reported to the FCA continues to drop.

Discover more here

PIMFA CASS Working Group - next meeting - Thursday 10 August 11:3013:00 via Teams

PwC have kindly agreed to present the findings from their recent cycle of CASS audits at an MS Teams meeting on 10 August.

Their feedback could provide valuable input to your preparations for the next cycle of CASS audits.

If you would like to join the CASS Working Group and attend this virtual meeting, please email KevinS@pimfa.co.uk

Also, if you have any CASS-related questions that you would like the working group to consider, please email them to KevinS@pimfa.co.uk

Digitisation Taskforce

The Digitisation Taskforce, chaired by Sir Douglas Flint has published an interim report setting out a number of potential recommendations and questions for industry to consider.

Sir Douglas will be conducting a period of open engagement over the next six months, ahead of delivering the final report to government. A follow up report taking account of comments received and final recommendations will be issued within six months.

The deadline for feedback and comments is 25 September 28.07.23.

FCA Feedback Statement FS23/4: The potential competition impacts of Big Tech entry and expansion in retail financial services

The FCA have published a feedback statement on potential competition impacts of Big Tech entry and expansion in retail financial services. The statement sets out:

- A summary of responses to DP 22/5 and the FCA’s response (see Chapter 2).

- Chapter 3 sets out the FCA’s current actions and next steps:

• Call for Input on Big Tech firms as ‘gatekeepers’ and key drivers including the role of data asymmetry between Big Tech firms and financial services firms

• Review the approach to supervision of Big Tech firms to improve monitoring Big Tech activities, both within and outside our perimeter

• Working with the Government and the Digital Markets Unit on the new pro-competition regime for digital markets

No regulatory or policy changes are proposed at this stage.

Consultation on the Digital Securities Sandbox

HM Treasury have set out their proposed approach to delivering a Digital Securities Sandbox (DSS), which will be the first financial market infrastructure sandbox delivered under the powers granted as part of the Financial Services and Markets Act 2023. The DSS will facilitate the testing and adoption of digital securities across financial markets. The consultation paper (chapter 3) also sets out policy issues, such as:

• Technology considerations

• Prudential treatment of digital assets

• Regulatory reporting

• Custody

• Retail users

• Operational resilience and outsourcing

The deadline for responses is 22 August 2023.

FCA - Application forms accessed via Connect

The FCA have published a new webpage: Changes to application forms accessed via connect advising firms that the FCA is reviewing and updating authorisations application forms to:

• Make it quicker and easier for firms to apply to the FCA for authorisation.

• Help the FCA capture the information it needs.

The first new form the FCA will be releasing will be Form A –used for Senior Management Functions and Controlled Functions applications.

The new Form A will be launched in the coming months and will be accessible via Connect.

FOS: The independent assessor’s annual report 20222023

The Financial Ombudsman Service (FOS) has published its independent assessor’s annual report and management response

• During the financial year 2022/2023, the FOS received 3,717 service complaints, of which 649 were investigated by the Independent Assessor.

• The Independent Assessor notes that in most cases the FOS is responding to service complaints fairly and to its customers’ satisfaction.

• The report notes that impartiality, professionalism and staff attitude were generally well done; however, there were service failings in communication or timeliness in 82% of cases.

• Additional areas of failing were adherence to FOS process and adequacy of investigation.

New Complaints Scheme for regulatory failures

The FCA, PRA, and the Bank of England have issued a new Complaints Scheme for those who have complaints about the regulators. This will become effective on 1st November 2023complaints from before this date will be treated under the existing scheme.

The highlight of the new scheme is the scrapping of the proposal for a £10k compensation cap for any regulatory failures except in exceptional circumstances. The levels of discretionary compensatory payments for non-financial loss have increased, and the document also sets out more clarity on eligibility for this. The appropriateness of these levels will be reviewed every two years.

The FCA affirms that the new Complaints Scheme does not replace consumer redress vehicles such as the FOS and the FSCS.

The full release is available here.

Press Releases

PIMFA welcomes Chancellor’s Mansion House Reforms....

Inflation hammering value of cash savings worth more than

PIMFA warns firms not to be Consumer Duty Zombies 28

PIMFA calls for ‘surgical approach’ to any changes to the SM&CR

Press Coverage

FT Adviser: No funds from FCA fines passed on to charity

FT Adviser: Expect tougher price regulation post consumer duty

The Daily Telegraph: Treasury plots new ‘Tell Sid’ campaign

Money Marketing: PIMFA: An unmissable opportunity for

Pimfa Compliance Conference

Hear from leading industry experts on the key issues facing compliance professionals in the investment management and financial advice world.

Bringing together a high-level audience who can engage with the experts, this conference will facilitate fruitful discussions with opportunity for questions and networking.

PIMFA WEBINAR: HOW PIMFA FIRMS CAN SUCCESSFULLY TAKE THE WORRY, FRUSTRATION AND STRESS OUT OF THEIR CASS AUDIT SESSION 2

In this FREE 60-minute webinar former regulator and co-creator of The PIMFA CASS Academy Katharine Leaman dispels the myths that surround a successful CASS Audit and withstand scrutiny from regulators, auditors and senior managers.

Please note that responses to this email address are not monitored. If you wish to get in contact, please email info@pimfa.co.uk