The regulator’s recently launched consumer duty will be a “sea of change”, according to Stuart O’Sullivan, associate director at consultancy firm Protiviti.
Speaking to FTAdviser, O’Sullivan said the business has been helping firms with what the Financial Conduct Authority’s expectations are and how to interpret and prepare for the consumer duty.
“I've been around for a number of years in the consulting space and the FCA have been extremely vocal with the industry on their expectations.
“They've already done a series of pieces of work to look at the implementation progress.”
He explained that the City watchdog has already looked at a sample of implementation plans from firms back in January and gave feedback as to what was good and what was poor practice within those.
It has also done some further work through communicating with different sectors as to what the regulator's expectations are.
“The consumer duty is a sea change and is a paradigm shift - at least that is how the FCA sees it - so people need to think about it slightly differently,” O’Sullivan said.
“You will have firms in different camps obviously. Some firms are rebadging what they've previously done and calling it consumer duty and maybe not going far enough.
“They should be benchmarking themselves against what the FCA has already found on these issues and ensuring that they can evidence themselves.”
O’Sullivan explained that a lot of the regulator’s supervision activity will be what evidence firms can provide and showing the outcomes that are being delivered through data.
“They're doing a lot more also around the kind of financial lives of customers so I think we've got the whole context of ‘you need to understand your customer a bit better’.
“You need to build products and services that are designed for identified target markets. You need to make sure that when you communicate with them, they understand that and give them the right support to understand the products and services.”
However, he also explained that with the changing context of the way people are using financial services, and more being bought online, this could change.
“Who knows where it's gonna go, but I think the FCA are definitely trying to bring the customer more into a strategic cultural focus for firms and then want firms to engage better with their customers and truly understand them.
“Take an IFA, for instance. They really need to understand what the financial objectives of that customer are, both today but in the future, and how to use the touch points with them in order to make sure that they are delivering what is expected."
He added: “It's getting to a deeper understanding of that customer and supporting them to achieve their financial objectives."
sonia.rach@ft.com
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