Those regulated firms who are banking on cuts to Consumer Duty are set for disappointment, according to MorganAsh.
While the government has sent a letter to all of the UK’s main regulators, including the Financial Conduct Authority (FCA), to investigate reforms to boost growth, MorganAsh believes some firms are under the misapprehension that this will result in reduced regulation, particularly around Consumer Duty.
Andrew Gething, managing director of MorganAsh, argues that is not only misguided, but is perhaps wishful thinking among those firms yet to fully get to grips with the new regulation.
He references the reply from the FCA to the government’s letter where it mentioned ‘minimal change’ to Consumer Duty with the removal of Consumer Duty board champions. Instead, the letter states out the intention to ensure Consumer Duty is sufficient, before implementing new rules.
Gething (pictured) said: “As with other regulated firms we view it as essential that regulation is proportionate, but those hoping this letter will lead to the wholesale rollback of Consumer Duty and its rules are likely to be disappointed. The FCA already has a remit for growth; indeed, the entire aim of Consumer Duty is to improve customer confidence in the financial services sector and to help drive sustainable growth. The FCA has cited many projects which all have a growth component and Consumer Duty is certainly one of them.
“The only real change mentioned in its letter is the removal of board champions. This is a minimal change with the need for the board to attest to complying with Consumer Duty still firmly in place. In truth, many firms had not yet implemented this anyway. The second will see Consumer Duty used as the measuring stick to determine whether any new rules to protect consumers are necessary.”
In its reply to the government, the FCA said that growth will be a ‘cornerstone’ of its strategy, through to 2030. Previously, the regulator has said that Consumer Duty is a fundamental part of its regulatory framework moving forward.
Gething added: “Calls to cut Consumer Duty is perhaps wishful thinking, especially among those firms that are yet to embrace Consumer Duty or demonstrate the change the regulator wants to see. This is particularly true when it comes to the requirements to provide good outcomes for vulnerable customers, with many firms still reporting few or zero vulnerable customers which just isn’t plausible.
“Working with firms of all sizes in different sectors, we have seen those that have fully got to grips with the requirements are already understanding the competitive advantage and reaping the rewards. Looking beyond those regulatory requirements and seizing the opportunity requires a culture change and a transformation of processes, technology and systems to identify customers, personalise service and deliver better outcomes. Fortunately for firms, this technology is readily available in the market and is proven.”
