Seven FCA questions to prepare for
The reality of regulation is that FCA will not be providing Firms with a Consumer Duty ‘to do’ list anytime soon. Yet at a recent roundtable event for investment firms FCA did well to provide a practical steer on what investment firms should be prepared to answer should the regulator come asking…
Although a must act for investment firms there is read across to all sectors. It is our view that these questions provide a helpful steer on FCA expectations. The regulator is serious on the need for change and to paraphrase it is a mistake to assume that what you are doing now is fit for purpose – change is expected – and a justification of continued practice is unlikely to be enough.
Can you answer these key questions:
What are you doing to segment your customer base (target market)?
How have you got comfortable that you have data and MI to track outcomes against each of your customer segments?
What impact has segmentation had on your charging model?
What is the proportion of customers for whom ongoing service charges genuinely represent fair value?
What changes will you need to make to your renumeration models to support the change to outcome focused regulation?
To the extent that you need to change employee behaviors how will you do that? And how will you know you succeeded?
What information do you need to satisfy yourself that you are discharging your personal accountability?
Answers to these questions can’t be superficial. They require documented, well assessed and evidenced thought processes which have been subject to robust challenge.
