In September we looked at how to create a Consumer Duty implementation plan, the key people to involve, and how to tailor your plan to meet your firms’ needs.
Now that such a plan exists let’s look at how to breathe some life into it – you certainly can’t afford to leave it on a shelf to get dusty! Remember that the Financial Conduct Authority (FCA) has stated…
“Firms should expect to be asked to share implementation plans, board papers and minutes with supervisors and be challenged on their contents.”
So how do you make your plan bloom? (and make it bloomin’ marvellous?!)
Regular reviews
Well, firstly set aside time to examine your plan regularly to review progress.
We know the larger firms we provide compliance consultancy to are doing this on a monthly or more frequent basis. For smaller firms, perhaps a quarterly review would be more appropriate?
So, if the plan had to be in place by 31 October to prepare the firm for the Consumer Duty start date of 31 July (a period of 9 months) what about a review date in January (first quarter), April (second quarter) and a final review date in July to make sure all actions are complete? You’ll then be ready to start the reporting phase of the Consumer Duty, which is at least an annual review of the outcomes achieved by the firm.
Evidence
If the FCA has said they want to see board papers and minutes, think about keeping minutes or notes of any meetings held to discuss the progress of your plan in order that you can share and discuss these with a third party.
Version control of the document will show how the actions set are progressing. You will want to retain the old and new version of any procedural changes that may have been brought about by the plan, for example an updated Business Continuity Plan or Vulnerable Client Policy.
If staff training is included in the plan (and it would be a rare thing if it wasn’t) check that CPD records have been kept where appropriate and, for other staff, a record of the team meeting training material used and minutes of discussions held.
We believe the FCA would expect to see three types of training being conducted as a minimum.
- Generic training for all staff on Consumer Duty, what it is all about, what it entails etc.
- Training for staff to keep them in the loop that the firm is working its way through its very own implementation plan, details about who is involved in this, and what part they may play in concluding the actions set.
- Finally, specific training on any new governance arrangements or procedural changes and how this impacts staff.
The devil’s in the detail
No matter what MI you have chosen to use as part of your plan, you will need to think about the level of detail to retain.
Let’s take an example: A firm plans to monitor the number of clients it has identified as potentially vulnerable. The average figure is deemed to be appropriate, but an average figure may mask an issue. For example, two out of three advisers are a long way above the average figure and one adviser is a long way below.
Is there an issue with this third adviser’s knowledge or application of your vulnerable client policy that needs to be investigated? (Or could that adviser be working with a different target audience of your client bank?) This is the level of detail you will need to go to if you are to be challenged by the FCA.
Hands on
Make sure that there is evidence of the senior management functions within the business being in full control of the implementation plan, with the fullest oversight of its delivery. While work may be delegated, the responsibility cannot, so do ensure that the FCA can see that the culture of your firm is very much led and driven by the senior managers.
Conclusion
The Consumer Duty’s start date isn’t that far away, so don’t forget to keep breathing life into your plan and testing that you’re getting the outcomes that you expect.