Consumer Duty Flyer - Flipbook - Page 7
Making it real
An important first step is ‘making it real’,
unfreezing the pre-conceptions within the
organisation: “ it is just TCF”, “we already do
PROD reviews” etc. Implementing the
Consumer Duty requirements will require
significant input from teams across the
organisation.
Inevitably there will be some challenges to
current business practices and ways of
working. And a requirement for some cultural
realignment. It is therefore vital that staff and
senior management know ‘what good looks
like’, and fully understand the objectives, and
what their role will be
in delivery.
‘…the more senior a person is and the more
relevant their role is to the Consumer Duty,
the more we will expect of them to deliver
good outcomes for customers. We expect
firms to provide relevant training to their staff
so that they understand their obligations
under the Consumer Duty and the individual
conduct rules.’
Asking the hard questions, up front, will make the implementation process for Consumer
Duty easier
Area of focus
Governance
and oversight
Questions to ask
The business
model
The product and
service outcome
The price and
value outcome
Do role profiles and performance management objectives include sufficient weighting for conduct risk and customer outcomes?
Can my functional heads evidence they have taken reasonable steps to: assess the products, monitor their sale, and take action to
address customer harms?
Is there effective oversight, and performance mi across the 3LoD? And do senior management take action when results are
outside tolerance?
Does the sales model benefit from customers: misunderstanding risks and benefits, being time pressured, exhibiting inertia, or having limited
other options?
Does the customer journey benefit, in any way, from practices that hinder the customer from taking action which would
benefit them?
Are my profits made from the areas of the business that the customer (or the regulator) wouldn’t expect?
Can I demonstrate the tangible benefits my product provides to a clearly identified group of customers?
Is the distribution model acting in the interest of customers (as opposed to the interests of those firms in the distribution chain)?
Can I easily exit a product or distribution arrangement (both from a contractual and commercial standpoint), if it exceeds
risk appetite?
Based on the consideration of price and benefits, am I comfortable that I could demonstrate that the product represents fair value?
Does the product remain fair value over a reasonably foreseeable timeframe (e.g. through the renewal cycle, or with
ongoing charges)?
Does my value assessment hold true for closed book products?
The consumer
understanding
outcome
The customer
support
outcome
Are the communications tailored to the information needs of the identified target markets? Does this include vulnerable customers
(in particular when considering the vulnerability of financial unsophistication)?
How do I assess whether customers understand the information you have provided to them (particularly via online channels)?
Is the sales channel suitable for the complexity of the product, and the information needs of the target customers?
Do I have the capacity to deal with reasonably anticipated levels of customer demand?
Do I provide an appropriate standard of support to all customers – including those with low-value or closed-book products?
When making changes to service delivery (e.g. going online only or using robo-advice), can I evidence that I have taken into
account customer outcomes (including vulnerable customers)?
CP21/13 15.7
Hogan Lovells | 7