The flurry of ‘Dear CEO’ letters being issued by the FCA emphasises the hard line the regulator is taking on Consumer Duty warns financial compliance specialists, B-Compliant.
“We are seeing a number of these letters being issued to firms” says B-Compliant director, Vicky Pearce. “Whilst they contain nothing new, they demonstrate just how significantly the regulator’s expectations have been raised.”
Last week, the FCA wrote to financial advisers to highlight the focus it is placing on consumer protection and the standards of care firms give customers. This ‘Implementing the Consumer Duty’ letter followed correspondence in December that summarised its priorities for the sector, particularly in relation to the recently announced thematic review of pension advice, DB redress and wind down planning.
Vicky added: “Consumer Duty represents a fundamental shift in the way advisory firms are regulated and the FCA is really trying to underline that non-compliance is not an option. For example, the quality of advisers’ implementation plans is currently under scrutiny through the multi-firm review, which is being extended in the run up to July’s deadline.
“The issues raised in the ‘Dear CEO’ letters should prompt firms to review and take appropriate action in respect of their existing systems and controls, either as part of their implementation plan, their existing compliance monitoring plan or their wider governance framework.”
B-Compliant is undertaking a benchmarking exercise to ensure clients’ Consumer Duty implementation plans are on the right track. Its consultants will visit firms to carry out a health check on current controls against the regulations’ outcomes that includes a list of issues and recommended improvements. For firms who would prefer to go it alone, it has also produced a DIY toolkit.