The FCA has published their policy statement PS22/9 on the new Consumer Duty. The changes will affect your T&C schemes. View the video to find out why. Amongst other things you will need to review
The structure and content of your T&C Procedures
The training needed for new starts
The way your advisers and support staff interact with customers
The standards you need to determine competence
The way you conduct FIT and proper assessments under the Certification Regime
How your T&C MI contributes to the effective governance of the new consumer duty
Whether you need to introduce T&C approaches to other business areas
Policy Statement 22/9 sets out how the FCA expects firms to achieve good outcomes for customers and in the process raise standards of protection and improve how financial services markets operate.
The FCA requires firms to have an implementation plan in place by the end of October 2022 which creates a route map demonstrating how they will comply with the new Consumer Duty.
In order to be successful firms will be looking to perform a gap analysis to identify where they fall short of the expected requirements. It will not be wise to assume that all your existing approaches will stand up in the desired future state.
Your T&C scheme, one of your people management policies, plays an important role. A case could be made that it holds one of the keys to your success. Positioning your T&C scheme or schemes as a true business enabler to deliver good customer outcomes may require you to change some aspects of what you do.
Failing to align your T&C Scheme with the ‘direction of travel’ will mean that firms will struggle to deliver the new Consumer Duty.
In this 60 minute video Jeff Abbott, Regulatory Services Director looks at how the new Consumer Duty regulations impact upon your T&C scheme.
The content of the video will highlight all the areas that you need to align to be successful.
Session resources
You can access the powerpoint slides by clicking the link above. You are permitted to use these slides with your colleagues in the same firm.
Behavioural Biases – Video referred to during the presentation
Questions and Answers
How the new Consumer Duty affects T&C schemes
Questions
- Which of the following is false?
TCF and Customer Satisfaction are different
TCF and Customer Satisfaction are the same
A satisfied customer may have been treated unfairly
TCF requires 6 outcomes to be satisfied
- What key element connects TCF and T&C?
The consumer outcomes
The company culture
Behaviours
Customer feedback
- The new Consumer Duty comprises
A new principle, 4 cross cutting rules and 3 outcomes
A new principle, 3 cross cutting rules and 3 outcomes
A new principle, 3 cross cutting rules and 5 outcomes
A new principle, 3 cross cutting rules and 4 outcomes
- Principle 12 states
A firm must pay due regard to customers and achieve good outcomes
A firm must act to deliver good outcomes for all clients
A firm must pay due regard to retail customers and achieve good outcomes
A firm must act to deliver good outcomes for retail clients
- In behavioural economics what category would you use to describe ‘a rule of thumb’ used in a decision-making process?
Asymmetries
Heuristics
Herd Mentality
Confirmation Bias
- Which of the following is NOT a cross cutting rule?
A firm must act in good faith towards retail customers
A firm must act with due care, skill and diligence
A firm must avoid foreseeable harm to retail customers
A firm must enable and support retail customers to pursue their financial objectives
- Which code of conduct rule is affected by the changes introduced by the new consumer duty?
1
2
3
4
5
- Why is SYSC 3.1.9 of particular relevance to satisfying the new consumer duty requirements?
It states that all employees must have the skills, knowledge and expertise to do their job
It recommends that firm should consider T&C requirements for all activities
It defines the record keeping requirements to generate Management Information
It states that firms must have a clearly defined culture and set of underpinning values
- Which elements of your T&C Scheme might be impacted by behavioural economics?
Standards used for Competence
The design of observation aids
The skills required by our supervisors
All of the above
- How frequently will the FCA require a report from your firm confirming achievement of good consumer outcomes?
It will not
Every year
As part of your Retail Mediation Activities Return
Every 2 years
How the new Consumer Duty affects T&C schemes
Answers
- Which of the following is false?
TCF and Customer Satisfaction are different
TCF and Customer Satisfaction are the same
A satisfied customer may have been treated unfairly
TCF requires 6 outcomes to be satisfied
- What key element connects TCF and T&C?
The consumer outcomes
The company culture
Behaviours
Customer feedback
- The new Consumer Duty comprises
A new principle, 4 cross cutting rules and 3 outcomes
A new principle, 3 cross cutting rules and 3 outcomes
A new principle, 3 cross cutting rules and 5 outcomes
A new principle, 3 cross cutting rules and 4 outcomes
- Principle 12 states
A firm must pay due regard to customers and achieve good outcomes
A firm must act to deliver good outcomes for all clients
A firm must pay due regard to retail customers and achieve good outcomes
A firm must act to deliver good outcomes for retail clients
- In behavioural economics what category would you use to describe ‘a rule of thumb’ used in a decision-making process?
Asymmetries
Heuristics
Herd Mentality
Confirmation Bias
- Which of the following is NOT a cross cutting rule?
A firm must act in good faith towards retail customers
A firm must act with due care, skill and diligence
A firm must avoid foreseeable harm to retail customers
A firm must enable and support retail customers to pursue their financial objectives
- Which code of conduct rule is affected by the changes introduced by the new consumer duty?
1
2
3
4
5
- Why is SYSC 3.1.9 of particular relevance to satisfying the new consumer duty requirements?
It states that all employees must have the skills, knowledge and expertise to do their job
It recommends that firm should consider T&C requirements for all activities
It defines the record keeping requirements to generate Management Information
It states that firms must have a clearly defined culture and set of underpinning values
- Which elements of your T&C Scheme might be impacted by behavioural economics?
Standards used for Competence
The design of observation aids
The skills required by our supervisors
All of the above
- How frequently will the FCA require a report from your firm confirming achievement of good consumer outcomes?
It will not
Every year
As part of your Retail Mediation Activities Return
Every 2 years
