Businesses are in danger of failing to embrace the opportunity that the upcoming Consumer Duty regulation presents as they may not be compliant due to a lack of preparation.
New research from Moneyhub has revealed that only 22% of firms believe that they are currently compliant with the new regulations.
This is despite 79% of Financial Conduct Authority (FCA) regulated firms acknowledging the significant impact that the new Consumer Duty regulations will have on their way of doing business.
Samantha Seaton, CEO of Moneyhub, said: “While many firms believe they are already customer-centric, Consumer Duty will test the reality of this.
“The new regulation demands a level of customer knowledge that most firms are yet to appreciate.
“There is an expectation that boards already have a plan in place by October. However, we can see that this is unlikely to be the case.”
This is certainly clear, as research shows that over 56% of decision makers at FCA regulated firms say that their business is not prepared and does not currently have projects in place to become compliant ahead of new regulations.
This is a significant concern given that the FCA expects boards to have an implementation plan approved by the deadline at the end of October 2022.
The FCA’s new regulations were created in order to ensure that customers receive communications from financial services firms that they understand and are offered products that meet the individual’s need at the point of sale and throughout the entire product lifecycle.
This aims to offer customers fair value and support when they need it.
Importantly for FCA regulated companies, these regulations will eventually affect firms’ book of business rather than just new business, which could prompt a re-evaluation of products that current customers are on and whether they are still appropriate.
Seaton added: “By not preparing early for the incoming regulation, firms not only risk being non-compliant, but also missing out on the opportunity that Consumer Duty presents.
“Taking a customer-centric approach rather than a product-led mode of operation is now imperative for all businesses.
“Moneyhub’s platform can provide this knowledge and the ongoing monitoring to ensure appropriate and suitable products now as well as throughout the entire lifecycle of that product.”
