Following on from my blog in May regarding Consumer Duty, today we will explore what this entails for businesses, highlight key preparation steps, and provide insightful questions to consider as they adapt to this transformative regulatory framework.
As the business landscape evolves, so do the responsibilities and expectations that companies must meet. Starting from July 31st, Consumer Duty has come into effect, impacting new and existing products and services available for sale or renewal. This comprehensive regulatory change signifies a significant shift in how businesses approach consumer interactions.
Understanding Consumer Duty:
Consumer Duty is more than just a regulatory update; it’s a call to elevate the standards of consumer protection and engagement. Businesses across various sectors are expected to comply with these new obligations, ensuring that their products and services are designed to meet consumer needs, perform as expected, and avoid causing harm or risk to vulnerable customer groups.
Key Steps for Compliance:
Many businesses are on track for Consumer Duty implementation, but some need to catch up. Time is crucial, and businesses must use the remaining time wisely by asking the right questions and ensuring they’re on the path to successful compliance.
Essential Questions for Businesses:
Are your products designed for consumer needs and tested?
· How do you mitigate risks to vulnerable customers?
· What actions stem from fair value assessments?
· How do you monitor product value using data and MI?
· How do you enhance communication strategies based on testing?
· How are communications adapted for vulnerable customers?
· How do you assess customer support for vulnerability?
· Is post-sale support as good as pre-sale support?
· Do all staff understand their Consumer Duty roles?
· Have you identified and mitigated key risks?
The Way Forward:
As Consumer Duty takes effect, regulators will prioritise addressing the most severe breaches promptly and assertively. The goal is to ensure consumer protection and prevent harm or risk. Businesses that successfully integrate Consumer Duty principles into their operations are well-positioned to meet regulatory requirements and enhance consumer trust and loyalty.
Consumer Duty represents a momentous shift in consumer-business dynamics, urging companies to prioritise consumer well-being and engagement. Businesses must actively embrace this change by self-assessing their practices and making necessary adjustments. By considering the pivotal questions, businesses can confidently navigate the Consumer Duty landscape, fostering positive outcomes and building enduring consumer relationships. As the journey unfolds, Consumer Duty becomes an opportunity for businesses to demonstrate their commitment to consumer-centric values and responsible business practices.