Consumer Duty
Almost any financial services firm dealing with retail customers is likely to be impacted by the FCA’s Consumer Duty initiative.
By way of reminder, the FCA recently introduced a 12th principle for businesses requiring that firms “must act to deliver good outcomes for retail customers”. This principle is accompanied by four underlying outcomes, focusing on:
- Product design and target market – requiring that firms ensure products are designed around and capable of meeting genuine customer needs, with a clearly identified target market;
- Information – ensuring that retail customers are provided with sufficient information to enable them to make informed decisions about the financial products they buy;
- Fair value – asking firms to take steps to assess their products and demonstrate that, having regard to the product features, all associated charges and any potential risks associated with the product, it represents fair value to retail customers; and
- Customer service – assessing the extent to which the customer service and support for the product is in line with customer expectations and reasonable given the nature of the product.
Whilst it would appear that these four outcomes are focused primarily on product design, the FCA has been clear that it regards the consumer duty as applying to both product manufacturers and distributors, albeit that firms may need to ask themselves different questions, depending on their role in the product and customer lifecycle.
The FCA expects firms to have taken the consumer duty seriously, with their guidance making it clear that they expect senior management within firms to be regularly reviewing their approach to consumer duty and assessing the extent to which they are meeting the four outcomes. The FCA has also added a new “Conduct Rule” requiring that all individuals focus on compliance with the duty
Finnovation has been supporting firms with their implementation of consumer duty since the initiative was first announced, and can assist with areas including:
- Reviewing existing products and services against the four outcomes, providing an independent, external view on potential areas of focus;
- Supporting the development of appropriate policies, procedures and tools to assess areas such as target market, fair value and customer literature;
- Assisting firms in designing robust management information packs for use by their senior management in order to provide ongoing oversight of compliance with the duty and early warning of any potential issues; and
- Delivering training to senior management or the wider employee community on what the duty means for them and the firm.
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As CEO, and now Chairman, I have had the privilege of working with Claire Conby as Chief Risk Officer and Executive Director of our UK entity. Her expertise, dedication and proactive approach to risk management have been instrumental in guiding our company through numerous challenges and opportunities. Claire has consistently demonstrated an exceptional ability to identify and manage risks while fostering a culture of compliance and growth. I am incredibly grateful for Claire’s leadership and unwavering commitment to our success as an innovative fintech company.
Claire and her team have helped us to navigate the very complex field of compliance including in depth discussions direct with the FCA over a period of months. We would never have been accepted on to the FCA Regulatory Sandbox had it not been for Claire's attention to detail and determination to get the right result for us and our project.
During the six years I have worked with Claire at Billon, she has taken on a variety of roles and responsibilities, always with a highly professional, capable, and proactive attitude. Supporting our UK business in both start-up and BAU modes, Claire has consistently demonstrated her business acumen and reliability, proving herself to be a steadfast and invaluable asset.
As the Global Head of Anti-Money Laundering for the then Corporate Banking and Financial Markets (CBFM) division of RBS Group (now NatWest Markets), I was fortunate to work with Claire, between 2002 and 2007, who designed and supported the anti-money laundering risk management framework for CBFM businesses globally, particularly UK and Asia Pacific regions. Claire built strong relationships with the business area, enabling her to create a comprehensive and robust framework that not only met regulatory and legal advice requirements but was also well-understood and aligned with our business objectives.
Over the past five years, I have consistently found Claire to be a professional and pragmatic risk manager with strong commercial acumen. She excels at ensuring the risk framework supports business aspirations while maintaining a balanced risk profile. It has been wonderful to witness Claire expand her influence from her Board role at Billon’s UK e-money business to a leading position at the Digital Pound Foundation. Recently, we had a fascinating discussion about the rise of CBDCs and the potential opportunities for Billon’s regulatory-compliant blockchain.
Claire was a fantastic, commercial, pragmatic addition to our team. She led everything compliance, from strategy to hands on QA, in an area she had zero previous exposure to. She's a delight to work with, and I hope I get the chance to do so again in the future!
