Cosegic is pleased to launch its new Consumer Duty Audit that provides firms with an in-depth evaluation of their adherence to the Consumer Duty (the ‘Duty’) requirements. The audit aims to help firms ensure that they are meeting the new Duty requirements on an ongoing basis, so reducing the risk of non-compliance and potential penalties.
Whilst firms were working to meet the new Consumer Duty implementation deadlines, it became apparent to Cosegic that many, across all financial sectors, did not fully understand the extent of what they needed to do to ensure they were compliant. Consequently, Cosegic’s Consumer Duty Audit was created to provide firms with a customised assessment that highlights where the firm is meeting, or not meeting Consumer Duty requirements and where enhancements are required.
Recently, firms across all sectors have received Consumer Duty questionnaires from the FCA to help them assess how Consumer Duty has been implemented and on 9th October, the FCA published its findings from its review of payments firms. The headline summary from the review is that just under half of firms who participated had only partially implemented the Duty and needed to carry out significant work to comply with it.
The FCA expressed its concern about these findings and said that it will continue to work with these firms to ensure any harm is mitigated promptly. The FCA set out its findings here and has also continued to review firms’ approaches to fair value assessments. Some examples of poor practice identified by the FCA included:
- complex pricing structures adopted by some firms, raising concerns that customers may not understand them;
- firms grouping materially different products together when completing fair value assessments, which could significantly impact the adequacy of the assessment;
- firms defining target markets too broadly meaning that products may not provide value to some groups of customers;
- firms stating that products provide fair value without providing supporting analysis or evidence;
- firms examining products against a favourable sub-set of the relevant market when benchmarking products against the competition, making favourable conclusions on value more likely;
- firms not having adequate processes in place to proactively identify vulnerable customers;
- firms providing insufficient information of the relationship between the cost of a product and how it relates to fair value; and
- firms not being able to provide evidence of how material issues in fair value assessments have been escalated to the Board.
Cosegic’s Consumer Duty audit provides firms with an in-depth evaluation of their adherence to all the Duty’s requirements. Firms will receive a detailed report setting out the findings and recommendations under each of the four Consumer Duty outcomes as well as an assessment of their Consumer Duty governance practices. Any recommendations made will be appropriate for each firm and can be used to enhance its proposition to deliver better customer outcomes and reduce the risk of non-compliance and potential penalties. The report will also provide boards and senior management with a clear picture of how aligned their firm is with Consumer Duty requirements, helping them when making strategic decisions and demonstrating that they are overseeing the firm effectively and focussed on putting customers first.
If you require any more information about the audit and our full Consumer Duty service offering please download our brochure below. If you would like to talk to a consultant then please contact us here.
