CONSUMER DUTY NEWSLETTER

As we now know, the Consumer Duty principles will be “live” by the 31st July 2023 for new and existing products and services, and by 31 July 2024 for closed products and services. In the meantime however, and for what many people saw as a “sting in the tail” is firms need to have produced an 'Implementation Plan' which must set out in detail how they plan to implement the Consumer Duty by the 31st October. Indeed, the FCA Policy Statement PS 22/9 says “By the end of October 2022, firm’s board’s (or equivalent management body) should agree their implementation plans and be able to evidence they have scrutinised and challenged the plans to ensure they are deliverable and robust to meet the new standards.” This means that firms need to get their plans in place and to outline how they intend to implement the rules, particularly in terms of the culture change the FCA is expecting to see which focuses more on the delivery of positive consumer outcomes. If you have not yet started your plan, your firm is now vulnerable and you should act on this without further delay. Firms will need specific, bespoke support in putting together that plan, and we at Paradigm are able to assist in that regard. We know that the work required in order to create the plan will vary from firm to firm, and will need involvement from numerous people from across the business. From a mortgage perspective, we know the majority of advisers provide a professional and ethical service to their customers. However, the FCA is clearly of the opinion that not all financial services work well for consumers across Mortgages, Protection, Investments and Pensions - hence the new rules. These new rules are set to allow firms to look outside of the rule book, and enable them to consider and define what ‘good outcomes’ mean for customers. These outcomes don’t just take the form of ensuring product suitability or the cheapest rate: they are much broader, and cover the whole customer journey, from the first time a customer contacts an adviser down to completion of the agreed engagement and beyond. The FCA has described the Consumer Duty as “a significant shift in culture and behaviour”. When you look back at some of the historic examples of poor practice, it’s hard to imagine it was driven by simple bad advice, poor marketing literature or a weak or inefficient process in a business. It was generally due to the culture of the owners, normally in their pursuit of profit above all else, and certainly above the importance of customer outcomes. So what can you do to ensure you are on track, and not one of the 10% of decision makers who say they don’t feel that they have a good understanding of the impending Consumer Duty legislation (according Moneyhub)? Perhaps, a start would be to look at your business and see how it currently compares against the principles set out in the Consumer Duty. Now the legislation has been published, you can match these against your current practices to identify any gaps which need addressing. There will be much you do now which fits in with Consumer Duty, but where change is needed it can be prioritised now. Consumer Duty: What lies in store? 6 CONSUMER DUTY NEWSLETTER Richard Howes Director of Mortgages Paradigm Mortgage Services