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Tick tock, tick tock…

Geoffrey Chaucer is credited with the phrase “Time and tide waits for no man” (although  The Rolling Stones that time was on their side) and as there is no current method of time travel, his comments remain indubitably true. 

Inexorably, time moves on and this is certainly the case in the microcosm of financial services – it’s over ten months since the implementation of Consumer Duty and that seems like it happened just yesterday.
Like it or loathe it (and a lot of advice firms probably fall into the latter category), Consumer Duty is with us and the next phase covering Closed Products comes into effect on 31July, but what many firms seem to have overlooked is that this isn’t the only important element of Consumer Duty that falls due by that date. By 31July 2024 all firms must also have produced their annual Consumer Duty Board Report.

We’ve mentioned this in previous articles as a heads up and there are plenty of other industry commentators who have done the same, but despite the reminders it’s apparent that many firms have yet to get to grips with this, and in some cases, Consumer Duty generally. 

Is it a shame that Consumer Duty was required in the first place?

Before we look at the board report maybe we should consider why Consumer Duty was necessary.

Recently the regulator as become far more focused and proactive. The tone of the language coming from the FCA is far more assertive than it was previously and some recent final notices are clear evidence of this. Data requests are more frequent and specific and are targeting firms that the regulator hasn’t previously been in direct contact with, but have you ever stopped to wonder why this is the case and why Consumer Duty was so robustly driven? Did the FCA just run out of patience at standards seemingly not improving?

Many seem to think that Consumer Duty has replaced Treating Customers Fairly, but in reality is hasn’t at all. The principles of TCF remain unchanged, but as it’s 17 years since that piece of regulation landed and we’re still seeing poor consumer outcomes on a large scale, maybe the fact that the penny hasn’t dropped for much of the financial services industry necessitated a different approach.

Since TCF landed we’ve had the thematic review of PP switching (watch this space on that subject), the financial crisis of 2007/8, RDR, the pension freedoms, SM&CR, MiFID II, the British Steel Pension Scheme DB debacle, a litany of Section 166s in relation to poor DB transfer advice and latterly, the issues surrounding ongoing reviews. Most of these developments were seen as mechanisms to improve standards and deliver better service and value for consumers, but have they done so?

Which brings us back to Consumer Duty, and specifically, the Board Report.

What is required?

Well, as some firms don’t have a board, there’s nothing in the rules that says that a formal board meeting is required, but the regulation does state that firms must produce a board report, and at least annually, this isn’t a one-off.

There is no prescribed format, but anyone who thinks that a couple of pages of narrative and some surveys from clients saying that their adviser is the best thing since sliced bread really won’t be anywhere near sufficient.

The FCA will expect firms to revisit their Implementation Plan, look at what they’ve done, produce and assess the MI to validate what’s being said, see where action is still required and record what they plan to do about it, and when.

They’ll also expect firms to assess how they’ve met with the principles of Consumer Duty, identify where they did and didn’t provide good client outcomes and update their plans going forward.

All of this will require careful thought and as we’ve already seen, the FCA is contacting firms requesting their documentation in relation to Consumer Duty, so it is probable that firms will receive unsolicited requests for their Consumer Duty Board Reports. As stated above, these requests are frequently made to firms that have had no previous direct contact with the regulator and more often than not require a response within a maximum of ten working days, so firms that haven’t complied with this requirement are likely to have a problem on their hands, largely of their own making.

The Board Report isn’t optional and ignoring it won’t make the problem go away.

Not started on yours yet? Time is of the essence.

Our View?

The 31 July deadline is fast approaching to get these reports completed and firms can’t say that they haven’t been warned.

We’ve commented previously that some of our firms have received unsolicited emails from the regulator requesting data and documentation in relation to Consumer Duty and these requests just come out of the blue. We’ve been contacted to see if the emails are hoaxes and when firms are told that they aren’t, you can imagine what happens.

More than once we’ve been asked if we have templates for a fair value and target market assessments (we do of course), but it’s the content that the firm needs to provide and we can only help here. The FCA wants facts backed up with meaningful MI, not some generic commentary that can’t be substantiated, so the report isn’t the only thing that some firms need to consider.

The FCA isn’t taking prisoners and firms that fail to adhere to the requirements of Consumer Duty can expect a rough ride. This is serious stuff and the regulator expects firms to be able to provide evidence that Consumer Duty is both embedded and delivering the right client outcomes.

Advice firms generally only retail one product – advice – and if they can’t get that bit right then the rest becomes largely immaterial.

We haven’t been inundated with requests from firms seeking assistance with their board reports yet, but expect that situation to change markedly the closer we get to the 31 July deadline. Some will inevitably leave it too late, but those that plan to meet the deadline have just a few weeks to get a wriggle on.

Some still view Consumer Duty as the imposition of more regulation, yet good client outcomes should be a fundamental basic requirement shouldn’t they? There are some really excellent firms out there who have little to fear and have been doing the right thing for a long time, but far too many others that fool themselves that because they haven’t received a litany of complaints, that everything is OK. They may find out that this really isn’t the case if they’re asked to provide the evidence to prove it.

Action required by you

This is important and every firm really needs to start, if they haven’t already, putting their Consumer Duty Board reports together. This isn’t a cosmetic exercise because you’ll need to support your assertions with evidence.

We saw this as a potential banana skin for a lot of firms, so have prepared a template to assist with the production of the reports, but it’s you that need to provide the material content.

This isn’t a ten minute job, so if you need help with this please get in touch pronto as it’s better to get things moving sooner rather than later.

Author - Paul Jay

How can we help you?

Thistle Initiatives has supported credit firms for over 10 years as a trusted compliance and regulatory adviser. In addition to assisting these firms as-and-when, our team of specialists can serve as your right hand in meeting and complying with FCA regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.

Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to