What is Consumer Duty?
The FCA has recently set out higher expectations in relation to how consumers are treated by financial services companies, called Consumer Duty, which outlines that ‘a firm must act to deliver good outcomes for retail clients’.
Within Secure Trust Bank Group, which encompasses V12 Vehicle Finance and Moneyway, we put customers at the heart of everything we do and put high importance on ensuring customers are treated fairly. This new higher standard of care gives us an opportunity to review all of our products and processes. Consumer Duty requires due diligence of end-to-end processes which could result in some changes which may affect our motor dealers.
What do you need to do?
If you are an authorised motor retailer, you will be required to comply with Consumer Duty, which includes evaluating each outcome outlined by the FCA against your own products and processes and adhering to the deadline dates outlined below. You should review the FCA guidance and seek external advice where appropriate.
If you are an unauthorised motor retailer, you should still pay close attention to the requirements under Consumer Duty and seek external advice on how this may apply to you in future.
What are we doing?
We are confident that our processes and products are already designed with the best interests of consumers at their heart, but the new Consumer Duty gives us all a chance to identify new areas for improvement.
We have already done a huge amount of work including a gap analysis against the four Consumer Duty outcomes: Products and Services, Price and Value, Consumer Understanding and Consumer Support.
Our Initial findings from the gap analysis are really positive, and we have set up four individual workstreams across STB Group to enhance areas for improvement, ensure no gaps exists and to keep us on track the deadlines set by the FCA.
Our goal is to work in partnership with you and we will therefore keep you informed as soon as reasonably possible of any changes we require you to make to meet our Consumer Duty expectations.
Key dates for your diary:
By the end of October 2022, firms’ will need to have agreed their implementation plans and be able to evidence they have scrutinised and challenged the plans to ensure they are deliverable and robust to meet the new standards. Companies are also required to maintain oversight of the delivery of implementation plans, to ensure the implementation work remains on track and is sufficient to meet the Duty standards.
Firms should expect to be asked to share implementation plans, board papers and minutes with FCA supervisors and be challenged on their contents.
By the end of April 2023 manufacturers of products and services should aim to complete all the reviews necessary to meet the four outcome rules for their existing open products and services so that they can:
- identify where changes need to be made to their existing open products and services to meet the Duty and implement these remedies by the end of July 2023
- share with their distributors the information necessary for them to meet their obligations under the Duty
By the end of July 2023 rules for all new products and services, and all existing products and services that remain on sale or open for renewal come into force.
At the end of the implementation period, companies should assure themselves that their firm is complying with their obligations under the Duty and ensure the firm has identified any potential gaps or weaknesses in their compliance and any action needed to remedy this.
By the end of July 2024 rules for all closed products and services come into force.
The first Consumer Duty report needs to be considered by the company within 12 months of the rules coming into force.