Hymans Robertson is warning that the race to meet the FCA’s new Consumer Duty requirements by its April 2023 deadline is being hampered by an increasing lack of resource capacity and other competing priorities.
The pensions and financial services consultancy warned that firms should not underestimate the time it will take to be ready for the new regulations, as many are still digesting the changes required to meet its standards.
The regulation is expected to require companies to not only comply but, also evidence how they are meeting their obligations.
They will need to be consistently showing that their products and services meet the needs of their clients and ensure good outcomes.
There will also be increased scrutiny around areas like managing vulnerable customers, staff competence and sales to unintended audiences.
Commenting on the issues facing compliance with Consumer Duty, Karen Brolly, head of products, insurance and financial services at Hymans Robertson, said: “The introduction of Consumer Duty should prove to be a significant event in the history of financial services regulation.
“It will rightly put consumer interests at the heart of all activities in the sector. However, it’s clear there’s significant constraint across the industry in the resources realistically needed to be able to deliver this, given how little time there is until the regulation is in force.
“Many providers, in particular those with large legacy books, still have much to do to change their overall culture and practices to meet the new demands. Some are just at the start of their journey and it’s clear that lack of time is an issue.
“While the frameworks they developed to meet the standards of the TCF (Treating Customers Fairly) regulation are a good start, they may not go far enough for compliance to Consumer Duty. Increased scrutiny in certain areas, will mean firms need to get better at gathering and assessing management information.
“To help alleviate the issue of the timeframe, firms should take a proactive approach, bearing in mind any relevant frameworks they already have in place.
“It’s also vital to scrutinise the gap analysis that they’re likely to have done, as well as consider using digital tools to help meet the regulatory requirement.
“It is probably also worthwhile assessing whether it would be beneficial using better profiling tools to help them meet the implementation deadline.”
