Firms may have naturally changed or upgraded their case management systems, data storage procedures, and other such practices over the course of several years, meaning that the process of carrying out a full review of historic data and products is potentially a significant and time-consuming task.
However, the FCA has reminded firms that the clock is now ticking, and so firms need to be ready for implementation come July 2024.
What firms should be doing
As a starting point, firms should be able to show that they have reviewed how well the implementation process worked for them the first time around in July 2023, and that they have considered how to amend and improve their plans to ensure a smooth and efficient implementation period in July 2024.
By doing this, firms will not only be working to the upcoming deadline, but will also be able to demonstrate that they are continuing to engage with the consumer duty and that they are monitoring processes and learning from these, and taking steps to modify and improve where necessary.
This is in line with the FCA’s recent reminder that the duty is not a once and done exercise.
More widely, Mills’ speech helpfully set out the details of four specific areas that firms have identified as being difficult from a closed product perspective. This gives firms a useful starting point to work from when progressing their preparations for implementation.
1. Addressing gaps in data
Specific issues here include firms not having data available about consumers’ characteristics and needs (in particular, records of any vulnerabilities), as well as product-related data such as sales records and historic performance records.
Mills indicated that, where firms are unable to address or fill gaps in records, they should “take additional steps to mitigate the risk of harm to consumers, for example through enhanced outcomes testing for these customers”.
In the first instance, firms should be actively taking steps to try and obtain a clear understanding of the extent of their historic records and be able to form a complete picture of what type of data is available and what type is not. Once this is identified, firms can then try and target the largest and most significant gaps.
In many cases, firms sometimes spend significant time and resource trying to dig for data and liaise with IT and service providers to try and recover historic records.
This process can, of itself, take significant time and may not always yield results. With the implementation date looming, time is not something that firms should allow to idle away.
