A survey by regulatory consultancy Bovill reveals that almost half of firms are unsure of how long it will take to implement the most challenging consumer outcome of the Financial Conduct Authority’s (FCA’s) Consumer Duty, with the implementation deadline fewer than 50 days away.
The poll of financial services firms finds that nearly two-thirds of firms (64%) say that of the four outcomes, ‘fair value’ is the most challenging. However, almost half of firms (44%) are still unsure how long it will take to implement, and were unable to give an estimate. This is despite the fact that product manufacturers must have completed all reviews needed to meet the outcomes rules by the end of the April, and that the deadline for implementation is in July.
The FCA recently published its review of 15 firms’ fair value assessment frameworks, finding that some firms are struggling to properly evidence how they are delivering fair value for customers. It also found that some fair value assessments needed to take a more granular approach to products and services that span different market sectors.
The Consumer Duty applies to any firm that plays a role in determining outcomes for retail customers, including SME customers, and seeks to ensure good outcomes in four key areas, including price and value. Bovill has found that many firms are having to commit significant resources towards implementing the Duty before the 31 July deadline.
Mark Spiers, Partner at Bovill, said:
“The level of change needed to implement the Consumer Duty will vary from firm to firm, however it is a very wide-ranging piece of regulation and many still have a lot of work to do before the deadline. This is a large piece of work and the greatest challenge for many firms is the uplift required, and the substantial investments that they are having to make in their capabilities to ensure they are compliant.”
Product manufacturers should have completed all necessary reviews by 31 April, to give distributors sufficient time to meet their obligations ahead of the implementation deadline in July.
After the deadline, firms will need to continue to invest in assessing fair value. Under the Duty they will need to consider outcomes on a forward-looking basis, considering whether products will offer value in the future. Bovill has developed a ‘fair value toolkit’, to help firms develop a robust approach to fair value.
Mark Spiers, Partner at Bovill, said: “Firms will need to keep their fair value assessments under continual review. Fair value is a moving target, and firms must continue to deliver it when circumstances change. Distributors need to think carefully about what data and information they need from manufacturers, so that they can be sure of consistently good outcomes over the product, service and client lifecycle.
“Bovill’s toolkit can help firms put the correct measures and methodologies in place ahead of the deadline, which in turn will allow them to ensure their products and services continue delivering for consumers.”
