The best of times, or the worst of times?

Sandy McGregor, Director of Policy, Simplybiz

The subject of regulation is unlikely to be something high up the list for anyone looking to create a literary masterpiece, however if‘ a short history of nearly everything regulatory’ was to be written, then the summer of 2023 would be worthy of at least a chapter, more likely a whole volume. Nobody reading this should need to be reminded... we hope... that this was when the Consumer Duty came into effect.

In the run up, this much discussed piece of regulation polarised opinion. Was it just TCF reinvented, or did it in fact represent a fundamental reset and refocus, putting the consumer back to the centre of everyone’ s attention? Now that we are two years in, we can begin to look back and reflect. Where have firms focused their attention? Is Consumer Duty now a regular feature in all conversations around regulation?

In our observations of the market, we have seen firms taking Consumer Duty on board in the spirit the Financial Conduct Authority intended. Of course, many firms start the conversation with an assertion along the lines of‘ We have been delivering good outcomes to our customers for years’, and this is likely to be true in most cases, but the new outcomes focused requirement means more recording and monitoring than had previously been the case- a‘ show me’ rather than‘ tell me’ approach.

Many firms we support have, as a result, made a tangible commitment to embedding Consumer Duty into their DNA, which is really positive. In particular, firms recognise the need and benefit of enhancements to the Management Information( MI) they collect, seeing how it can help them to identify regulatory risk earlier and provide assurance around the delivery of good outcomes to their customers. We have noticed that firms are now seeing themselves in, perhaps, a more objective light. This represents something of a cultural shift.

A good metric to show how Consumer Duty has become embedded in the mindset of firms is to look at a handful of the questions we received from members on a recent Compliance Clinic event, the subject which was completing the annual Consumer Duty Board Report.

“ We have spent time working on our support framework and the MI we collect for customers with vulnerable characteristics. Is this something we can record in our Annual Report?”

16 | The Adviser