Four months on from the Financial Conduct Authority’s (FCA) Consumer Duty deadline this Summer, Governance, Risk and Compliance (GRC) professionals throughout the Financial Services (FS) sector are gaining valuable insights to its impact on the industry. The new regulation, geared at enhancing transparency and fairness in financial products and services, has prompted significant adjustments in governance frameworks and risk management practices.
From a GRC perspective, the initial period has been characterised by a heightened focus on compliance. Financial institutions have worked to align their operations with the stringent requirements of the regulation and GRC professionals have played a pivotal role in conducting thorough assessments of existing policies, procedures, and decision-making processes to ensure conformity with the new standards.
With increased emphasis on customer-centricity, the regulation has also necessitated a shift in mindset, requiring organisations to prioritise the best interests of consumers in all facets of their operations.
Monitoring and reporting have become critical focal points for GRC professionals. The regulation calls for the ongoing review of policies and procedures against Consumer Duty requirements; staff must understand and engage with the regulation and adhere to its principles; regular compliance assessments must be conducted on products and services; accurate documentation must be maintained; complaints handling managed for rapid and satisfactory resolution; and transparency upheld – internally to the board and to the regulators.
Meeting FCA requirements is no mean feat without a defined compliance programme and with strategy and process supported by technology. And since under Consumer Duty, Boards now hold accountability for outcomes, the value of reliable data only increases as does the need for agile GRC technology.
In a speech delivered at Deloitte in November 2023* Nisha Arora, FCA Director of Cross Cutting Policy and Strategy emphasised the role of data in measuring consumer outcomes:
“… you need to make sure you’re assessing, testing, understanding and evidencing the outcomes your customers are receiving - on an ongoing basis. Where we have seen firms doing this well, they have focused on the outcomes they are aiming to deliver. And they have identified the data they need to measure and monitor that these outcomes are delivered. Where firms are not meeting our expectations, it’s often because they are just repackaging existing data and haven’t thought seriously about what information they would need to really understand consumer outcomes.”
With improved workflow across the entire product lifecycle and automated governance reporting for product oversight, Decision Focus’ Governance module is key to achieving compliance with Consumer Duty requirements (and those of other regulators within an evolving regulatory landscape.)
Evaluating and interpreting vast datasets, the module enables financial institutions to make informed and ethical decisions that prioritise consumer satisfaction. Every decision is traceable, with a comprehensive audit trail for regulatory scrutiny.
Consumer Duty demands ongoing commitment, and from July 2024, the regulation will also apply to closed financial products and services.
To find out more, watch our on-demand webinar, ‘Addressing Consumer Duty Requirements in the UK' or book a demo.
*Consumer Duty: Not once and done | FCA