The Adviser Issue 4 | Page 13

TECHNICAL TALK
• act in good faith
• avoid foreseeable harm
• enable and support retail customers to pursue their financial objectives
Finally , the regulator laid out four Outcomes which back up the Principle , those being
• Governance of products and services
• Price and value
• Consumer understanding
• Consumer support
Sounds familiar ? Well , it is ; Principle 12 builds on and supports Principle 6 and 7 - the ones about treating customers fairly and ensuring communications were clear , fair , and not misleading . In addition , there is a fair amount of guidance around PROD . So , although new , at least some of the stuff should be already in place . And it ’ s not as onerous as you first might think . Throughout the Consultation Paper the regulator talks about proportionality and applying only to the extent of the size of a firm , its type of business and the clients with which it works . That seems logical as it affects 51,000 firms , those being the big manufacturing guys as well as the small distributors .
Here ’ s where it gets a bit serious though , and that ’ s the section entitled ‘ Monitoring and Governance ’. The regulator makes mention that a key part of the Consumer Duty is that firms assess , test , understand and are able to evidence the outcomes their customers are receiving . Without this , it would be impossible for firms to know that their products and services are performing as they and customers expect , and consistent to the Consumer Duty .
The Consumer Duty
The Consumer Duty
THE CONSUMER DUTY WILL CREATE A NEW PRINCIPLE , WHICH WILL PROVIDE AN OVERARCHING STANDARD OF CONDUCT FOR FIRMS .
Firms can expect , at every stage of the regulatory lifecycle , to be asked to demonstrate how their business models , the actions they have taken , and their culture are focussed on good consumer outcomes . The rules require firms to :
• monitor and review outcomes
• identify poor outcomes and understand why
• have processes in place to adapt and change products , services , policies or practices
A firm ’ s governing body should review and approve the firm ’ s assessment and agree any action required , at least annually . Although there will be no prescribed format for the way in which firms evidence their monitoring , the regulator expects firms to maintain records so that they can be provided on request . So , it ’ s clear there is record keeping involved , and CP21 / 36 gives quite a lot of guidance on this . In addition , they also expect there to be clear responsibility from senior management within a firm . SM & CR establishes clear senior management responsibility and applies to the Consumer Duty as it does to other Principles and rules . CP21 / 36 is pretty much developed as it stands , with the inclusion of draft guidance for firms , all 29,000 words of them . It will affect firms right through the value chain to a greater of lesser degree . Yeah , let ’ s get a bigger boat , it ’ s nothing we as an industry can ’ t handle though .
Cross-cutting Rules
Governance of products and services
Price and value
Consumer understanding
Communications
Consumer support
Customer services
Are you looking for more support ? Our Business Consultancy Team can work with you to ensure that you are prepared for the arrival of the Consumer Duty . Call us today on 01484 443419 or email us at bc @ simplybiz . co . uk to find out how we can help .
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