FCA’s Consumer Duty: MirrorWeb’s Harriet Christie examines data retention duty | So Good News
As advisers incorporate changes in practice to reflect the FCA’s Consumer Duty rules, MirrorWeb’s Harriet Christie dives deep into this topic as she explores how and why it has happened, what has changed and what is being used, what needs to be done. be taken by law enforcement agencies and information storage services.
The UK Financial Conduct Authority’s (FCA’s) latest plan outlines its key strategies for the next three years, with the new Consumer Duty being the ‘cornerstone’. The long-awaited restructuring marks a crucial period in the UK economy, as the regulator tries to overhaul the system in which the sector is run. This article will explain how and why it came into use, the changes that have been made, the implications, and how companies can continue to adapt to the times ahead and beyond.
What is Consumer?
Before we go any further, it is important to share the FCA’s explanation of the meaning of some important terms, which ‘consumer’ creates in their eyes. It is worth noting that this is what he called the Work.
The FCA often uses the term ‘consumer’ when referring to a broad group of users of financial services, and ‘customer’ when referring to a single company’s customers or potential customers. However, ‘all refer to retail customers within the Service’. The word ‘product’ is used to refer to goods and services.
It is important to understand that Consumer Duty is a new measure, as opposed to a restatement of existing policies. Requirements are built on the basis that financial companies must be consumer oriented. This means they need to focus on delivering better results to retail customers, especially in the unforgiving (and increasingly digital) business climate of 2022.
As the policy statement explains, “We want to see increased consumer protection in financial markets, where companies compete fiercely for consumers’ needs…this is especially important as consumers face increasing pressures, including rising costs.” The rise of e-commerce is another important factor, and the Role will have a clear impact on how companies manage their digital distribution channels, whether online or through an app.
These videos also include real-time information on customers, while digital design (where options and options are displayed) is very effective in changing customer decisions. Fortunately, digital platforms also allow the possibility of changing this design, if the result is not effective.
Who does it work for?
Basically, this process applies to:
- All UK-based companies that provide products and services to retail customers, including where there is a distribution channel that involves retail customers.
- Available and closed
- Payment services are a matter of electronic money
- Potential and actual customers of the company
- Those who have retail customers located in the United Kingdom (some rare locations)
What has changed?
The FCA has set out four key areas for companies to focus on, which will enable them to comply with the key principles of the Consumer Principle; providing good results to retail customers. They are as follows:
and. Products and services – The FCA requires that all products and services sold to consumers are designed to meet their needs, and guide those consumers accurately.
ii. A price is a price – The FCA aims to ensure that products and services represent value while meeting the needs and objectives of consumers.
iii. Consumer understanding – The FCA wants corporate communications to support consumers at all times by enabling them to make informed financial and service decisions. It requires consumers to be given the information they want, at the right time, and given in a way that is ‘clear, fair, and not misleading.’
iv. Customer support – Does the company have systems in place to provide adequate customer service? The FCA requires companies to provide a service that meets the needs of consumers throughout their relationship with the company.
How fast is it?
Although compliance will not be required before 31 July 23 (see specific dates below), companies may be asked to share their plans from 31 October 2022.
- 31 October 2022 – deadline for company boards to agree implementation plans
- 30 April 2023 – the deadline for manufacturers to share key information with suppliers to meet their obligations
- 31 July 2023 – Setting the deadline for all new products and services, and all existing products and services that are for sale or open for renewal.
- 31 July 2024 – the last day of the installation of closed products and services. The aim is to give companies more time to bring these old products, which are no longer sold, to meet the new standards.
- 31 July 2024 – and the deadline for the company’s first annual report on consumer activity. This is in line with the new requirements under the regulation for the company to conduct an internal audit at least annually.
Although it may feel like there is still plenty of time to address these complaints before the Project is implemented, the truth is that the project needs to be done properly. The FCA’s most recent changes explain, for plans to be implemented on October 22, ‘Firms must demonstrate that they will review and challenge these plans to ensure they are deliverable and robust enough to meet the new standards.
“Companies should also consider any work required by other parties to prepare for the Project and ensure that their plans allow sufficient time for this.”
If the Consumer Duty system is not written by your organization, you have some things to do.
How to put it in the culture?
As stated above, the FCA ‘requires corporate bodies’ and senior management to ensure that good outcomes for consumers are central to their culture, policies and business objectives.’
Rather than just checking new boxes, the FCA wants to change the corporate culture in the UK financial sector, so that better outcomes for consumers happen naturally, rather than simply enforcing existing regulations.
After taking the regulator over 4 years to get to this point, Consumer Duty is the FCA’s ‘flag change’ and is responsible for saving time and resources during the Brexit and Covid-19 trial. The FCA should expect that this process will be under a lot of media and political scrutiny. It can mean catastrophic failure if things go wrong.
Therefore, businesses should not be fooled about the importance placed by the FCA on this issue and should ensure that they are placing the necessary and collective attention on their change projects. Otherwise, they leave themselves to problems.
Sheldon Mills, the FCA’s Chief Executive, Consumers and Competition, announced in December 2021, ‘This new role will drive cultural change in the industry. We expect companies to step up and put consumers at the heart of what they do, and we will hold senior managers accountable if they don’t.’
However, it is not a one-way street. Sheldon has acknowledged that such upheaval will also require evolution on the part of the FCA, as it gradually changes its standards and procedures.
A great responsibility
The FCA wants companies to inform…
- For any material breach of the Services
- If they cannot meet the deadlines set
- If businesses choose to waive or restrict access to products and services as part of their plans to implement this Service.
There’s also a whistling thing. Companies will need to notify the FCA if they become aware of any non-compliant companies. This responsibility also extends to other companies in the chain, who must also be informed if (the whistleblower) thinks that the non-compliant company has caused problems for the retail customers. It will not only be the regulators that answer the business, but their entire distribution system.
Monitoring and reporting requirements
The FCA’s Feedback and Final Rules Document address many of the concerns that arose from extensive engagement ‘with many stakeholders.’ Among them was a request to clarify the evaluation results and what should be collected, while some respondents said that evaluations are difficult, and that ‘it will take time to develop the necessary skills and implement the procedures.’
FCA’s response is very interesting. ‘We don’t want to provide information that companies should use to evaluate (customer) results.
‘During implementation, companies will expect us to ask them to share with us their way of assessing the Work. This is because we can understand what…they plan to collect and modify the systems they have in place to provide this information. We will provide feedback on any useful information to all companies, so that they can learn from others, improve their processes and create best practices.’
Essentially, the FCA has accepted that this is a learning curve for everyone (including themselves) and has agreed to analyze different options before deciding on the best options, which they will share to ensure success.
Almost the same can be said for reporting requirements. There is currently no obligation to provide regular performance reports. However, this lack of clear instructions should not be considered a right to neglect. Indeed, the FCA has stated that the data collected ‘may evolve into regulatory reporting requirements in the future.
Most importantly, the onus is on financial institutions to find solutions that ensure compliance with the Act. They are the ones who will be held responsible if they don’t.
Data storage service
UK financial services companies may be concerned about the lack of definitive guidance to accompany the new regulations. Fortunately, technology already exists that can help with tracking.
Through communication archives, companies can capture all aspects of the customer experience, enabling companies to measure, evaluate and, if necessary, change things (whether in languages or through digital infrastructure) to improve customer outcomes. As a reminder, the four main areas recognized by the FCA are Products and Services, Cost and Value, Consumer Understanding, and Consumer Support, all of which can be managed effectively in savings.
It is important to note that businesses have been encouraged to change their output based on the type of product, target market and information needs, so the ability to capture multiple channels is important. Communication can be monitored and recorded on different systems (websites, emails, social networks, Whatsapp) continuously, which helps companies show regulators that consumers are on their display.
Financial advisors need to be well versed in the technology at their disposal. Above all, it is important for businesses to ensure that they have their strategy as quickly as possible. The deadline has passed, and at any time, companies can be invited to share their ‘reviewed and challenged’ plans.
About Harriet Christie, Chief Operating Officer – Harriet graduated from the University of Sheffield in 2010, with a BA in Management Accounting, Entrepreneurship, Business Law, BSR, HR. He entered the Tourism space, starting as an Accounts Executive at LateRooms.com, achieving the position of Global Accounts Manager within 3 years. He held this position for another 5 years as the business continued to evolve and grow, before taking on the role of Key Account Manager with MirrorWeb, a messaging service from in Manchester.
Harriet was appointed Chief Operating Officer in 2020. Since then, she has been instrumental in overseeing the evolution of MirrorWeb’s product and service offerings, as well as the growth of the business since taking on the role.