On 31st July 2023, the FCA implemented the Consumer Duty as a regulatory requirement for new and existing products and services that are open for sale or renewal, by regulated and authorised firms. The identification of any potential gaps or weaknesses in the firm’s compliance framework should have been completed, with actions taken to remedy any deficiencies. Now all authorised firms should focus on evidence-based outcomes testing and remediating where it’s needed. This requires firms to assess, test, understand and evidence the outcomes their customers are receiving.
The key with outcomes testing is for collaboration between the First Line of Defence and Second Line of Defence to ensure that ongoing monitoring occurs across the business – and effectively.
For outcomes testing, firms need to consider four main points:
- What it’s going to look like?
- How will it happen?
- Who needs to be involved?
- Can this be achieved on a timely basis?
Where firms identify gaps that still need to be fixed, they should be focused on resolving them quickly. Testing of these corrective actions should be undertaken to ensure that they have actually resulted in better outcomes for consumers. One way of achieving this is by implementing an appropriate Outcomes Testing Programme, which can be used to complete your annual Consumer Duty reviews. Firms must ensure that they use Management Information as a fundamental tool to monitor the performance of the control and for reporting to Committees and Board. As with most parts of your compliance, success can often only be demonstrated through the evidence you are able to produce, so our advice is evidence, evidence, evidence.
If you have any questions or require support with Consumer Duty, please get in contact with us.
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