10% of decision makers (CEOs, Chairman, and Board Directors) say they don’t feel that their firms have a good understanding of the impending Consumer Duty legislation despite having less than a year to become compliant according to a new report by Open Data and Payments platform Moneyhub, Consumer Duty: Opportunity or Further Regulation?
The research, commissioned by Moneyhub and carried out by Opinium Research, saw 150 senior members of the financial services industry interviewed by telephone in order to evaluate the industry’s preparedness for the new regulations due to come into effect in July 2023. With one in ten doubting their own firm’s understanding of the new rules a knowledge gap was clearly identified.
Indeed, while 61% of those interviewed claimed that they knew a lot about the impending legislation, three in ten (31%) said they only knew a little, and 7% said they knew nothing at all.
There is a concern that this knowledge gap has contributed to inaction across the sector with a third of decision-makers saying their firm won’t be compliant by the deadline of April 2023 originally given by the FCA. 19% said that it would be a challenge to hit the original deadline, and 14% said it wouldn’t be possible at all. While the FCA has moved the deadline back to help businesses on their journey to become compliant, with only a couple of additional months available there is significant concern that many will still struggle to be ready.
Moneyhub’s research found that 56% of decision makers said their firms were still not compliant and, importantly, had no projects in place to become so despite the FCA voicing expectations that boards have plans in place by the end of October 2022.
The FCA’s new regulations are to ensure that customers receive communications from financial services firms that they understand, and are being offered products that meet their needs, offering fair value and providing support when they need it. Importantly for FCA regulated companies, these regulations will eventually affect firms’ book of business rather than just new business. This in itself will prompt a re-evaluation of products that current customers are on and whether they are still appropriate.
In order to offer appropriate products and services for clients now and through their lifetime a deep understanding of the customer’s life is now needed. Data has the potential to bridge this gap and could offer a cost-effective solution for businesses needing to become compliant soon.
Samantha Seaton, CEO of Moneyhub comments: “There is a clear knowledge gap within firms around the incoming Consumer Duty rules, but ignorance isn’t an excuse for non-compliance. It’s vital that there is more awareness not only around what the new regulations will mean for businesses, but also how to become compliant in a way that benefits the business.
“Too often we can see regulation as a box-ticking exercise, but that means we could be missing out on significant commercial opportunities. Data, and in particular, the contextual insights available from open banking and open finance transaction data, can provide firms with the tools to design more targeted products, services and customer journeys which lead to stickier, more profitable relationships with customers, on top of being Consumer Duty compliant.”