Presenting at Mortgage Solutions’ BMPS, Sarah Batham, general counsel and chief risk officer at Sesame Bankhall Group (SBG) shared a timeline for companies to act on the new rules.
She said: “By next month, all businesses will be required to have an implementation plan in place, which sets out very clear actions as to what you need to do to make sure you can implement the consumer duty rules.
“Implementation plans should be signed off by the board or other significant governing bodies. And you should be able to demonstrate that the boards have given them sufficient scrutiny to make sure that they are robust enough to deliver the requirements of the consumer outcome.”
Batham added that by April next year, manufacturers will be expected to share information with distributors on what has changed and by July, all firms will be required to implement these changes into all open products and services.
Aggressive timescales
Batham said these were “very aggressive timescales, given the amount of work that needs to be done”.
The Financial Conduct Authority (FCA) released the Consumer Duty paper in July, detailing how regulated firms are now expected to meet the rules which put a focus on good customer outcomes and reducing harm.
Protection providers and distributors will already be compliant by following the regulator’s Product Intervention and Product Governance Sourcebook (PROD) rules, Batham noted.
She added: “I think it’s pretty obvious that this is going to require a lot of time and resource for most firms. And it’s going to require a number of different people from various different areas across your business.”
Batham said firms should already be thinking about any gaps in their approach, otherwise evidencing their plans by October would be difficult. While practices would need reviewing, Batham added that “it’s worth bearing in mind that the consumer duty is built on a foundation of existing rules.”
Support with compliance
When asked if the responsibility of complying could make directly authorised (DA) firms switch to an appointed representative (AR) structure, Batham said it was a ”double edged sword”.
“The thing for DA firms, is there is a lot of work to do. It could be that actually it’s easier to go and be an AR because that work will be done for you at the principal level.
“But I think the flip side to that is as an AR, you will still be required to produce lots of management information. So, there’s still going to be that administrative burden on you to provide that information to your principal.”
