Appearing at the London Institute of Banking and Finance (LIBF) mortgage conference this week, Nic Dent, market engagement manager at financial services tech firm Worksmart, said one of the main “mistakes” he had seen was firms handing over the responsibility of Consumer Duty to compliance teams.
Denton added: “Inevitably they’re the ones trying to tick boxes and do the right thing, provide the evidence… it’s far more than that. It requires a change in how you operate as an organisation to make the best of it. Certainly, in the years to come, maybe not by the deadline of July.”
He added: “Be conscious of your own role in this because compliance will only focus on that part, but it should be driven by those of you at the front end of the business and your competence and capability.
“Consumer duty is commanding that accountability right down through the organisation.”
Denton also said the incoming rules were an opportunity to make change in the sector.
Denton said that in the 25 years he had worked in the sector, the firms that had thrived were the ones which “embraced change and leveraged it to make a difference to them as an organisation”.
“Consumer Duty gives you the biggest opportunity to enhance your business that I have ever seen,” he added.
Going ‘well beyond’ TCF
Referring to some of the perceptions of Consumer Duty, Emma Howell, business development manager at Worksmart, said it was “dangerous” to think of it as a ramped up or revised version of Treating Customers Fairly (TCF).
She added: “This isn’t about doing the right thing, it’s about doing the right thing and evidencing that you’ve done the right thing.”
She also said it went “well beyond” TCF and the usual factfind.
Howell added: “It’s about how well do you really know your customer. Can you identify their vulnerabilities today and can you identify potential vulnerabilities in the future?”
Regarding post-completion, she said in her experience she had not come across a broker who kept in touch with their client. She questioned how brokers would be able to understand how their clients’ situations may change without doing that.
A data focus
Denton said Consumer Duty would heavily focus on data and recently, the regulator had been “poaching data analysts… and that’s supporting the big data project they have going on. They’re investing into this, and it will be a game changer.”
He added that the Financial Conduct Authority (FCA) would “increase the level of data, returns and reports” with a view to analyse the regulated markets. He said the FCA was “being very transparent” about the fact that they were looking at this.
He said sectors which “naively” took the view that because they do not get complaints there is no need for change was “not what the regulator expects”.
Denton added: “If there is a certain level of business, there is bound to be a certain level of dissatisfaction. You should be encouraging that [complaints] because that’s an opportunity to improve.
“The regulator will be cutting and slicing that information… the warning is, not to be complacent about it.”
