Yes, believe it or not, as this article lands in your inbox it’s six months since Consumer Duty went live.

Time really does fly when you’re having fun (what do you mean, this isn’t fun?) and in another six months from now the second phase of CD, covering closed products, comes into effect. More on that soon.

We provided lots of commentary about CD in the run up to 31/7/23, and did so subsequently, but judging by the queries will still receive, it seems that some firms have done little beyond the creation of their Implementation Plan. Plan being the operative word here, because it’s still just a plan in some cases, and in a few others they don’t appear to have even got that far!

There is still lots of indignation about what constitutes fair value and plenty of commentary just this week in the financial press about it, but actually doing something beyond issuing a valuation and having a cuppa and a bun with the client might be a good start.

Rather than blather on about what most firms should be well aware of, and candidly, doing already, what seems to have slipped under the radar for many appeared in commentary within a speech made on 1 November last year (three months in) by Nisha Arora, FCA Director of Cross Cutting Policy and Strategy (neat job title, eh?), entitled; Consumer Duty: Not once and done.  Most of this was nothing new and pretty much as expected, but it was in the ‘What comes next for firms ‘ bit where things got interesting, with the following:

Which brings me to one of the key aspects that you should now be considering – your annual board report. 

As we set out in our rules, at least once a year your board, or equivalent governing body, must review and approve an assessment of whether your firm is delivering good outcomes for your customers. 

This assessment should include the results of your monitoring on whether your products and services are delivering expected outcomes in line with the Duty – and any evidence of poor outcomes.

And before signing it off, your board needs to agree the actions required to address any identified risks or poor outcomes and agree whether any changes to your firm’s future business strategy are required. This will take time to do well, so don’t delay!

This was followed with:

This assessment will be part of the evidence we use to assess a firm’s ongoing compliance with the Duty. You’ll need to be able to provide it, and the management information that sits behind it, on request. As I said, the Duty is not once and done. Firms’ actions, assessments, testing and evidence need to be continuous.

Annual Board Report? Yup, an annual board report.

How many firms’ radar did this get under then?  Anyone who thinks that no complaints equals everything is hunky dory should probably think again. Words like ‘evidence’, monitoring’, ‘action’ and ‘changes’ before ‘sign off’ provide a fairly obvious indication that the Implementation Plan wasn’t the only thing that firms needed to consider. Ooh no.

Monitoring suggests that something is being monitored. So what are you monitoring? And do you have any MI to provide the evidence of what you’re monitoring?  What does this tell you? What actions are you taking? Does this require changes to be made? So what does that board report need to look like?

Firms that plan on doing nothing new and continuing with BAU really need evidence that no actions or changes are required, and to do so they need MI. We’re not talking about the new business register and a few file checks, regular readers will have seen in past articles, here and here for example, that the FCA is asking for a lot of data from firms and it’s the sort of thing that we’ve highlighted within these that is being demanded, more often than not from firms that have never previously had direct contact with the regulator. And usually within ten working days.

This is serious stuff and firms under the impression that their Implementation Plan was job done really need to wake up. Not only does this require regular review, but so do your target market and fair value assessments, along with the MI you should be producing that tells you how CD is working and what actions, if any, you need to be taking. This all needs to be articulated in your annual board report (or an annual report of some sort for firms that don’t have a board), so if you simply aren’t prepared and you don’t seek third party support then would now be a good time to contact someone?

When an email from the FCA lands in your inbox requesting a copy of your Implementation Plan, MI and board report and you’ve got the thick end of naff all to send back this may be a problem.

Think six months has flown? Imagine how short a timeframe ten working days can be.

Still think there’s nothing to do?