The long-awaited overhaul signifies a pivotal moment in UK financial services, as the regulator attempts to modernise the framework through which the sector is governed.
As we are now largely familiar with the timeline and content of the consumer duty, this article will look at how data archiving can help businesses ensure compliance.
In the FCA’s feedback and final rules document, it addresses multiple concerns that arose from extensive engagement “with a wide range of stakeholders”. Among them was a request for further clarity on monitoring outcomes and what information should be gathered, while some respondents argued that monitoring outcomes is complex, and that “it will take time to develop the necessary capability and get the systems in place”.
The FCA response is certainly interesting: “We do not intend to exhaustively prescribe the information that firms should use to monitor (customer) outcomes.
“During the implementation period, firms should expect us to ask them to share their approach to monitoring the duty with us. This is so we can understand what information […] they are planning to gather and what change programmes they have in place to deliver these insights. We will feedback any useful insights to the industry as a whole, to enable them to learn from others, improve their own approach and build best practice.”
Essentially, the FCA has accepted that this is a learning curve for everybody (including itself), and admitted that it will analyse a variety of approaches before deciding on best practices, which it will then share for the greater good.
Almost the exact same can be said for reporting requirements. There are currently no regular reporting obligations in respect of the duty. However, this lack of explicit instruction should not be seen as free rein to overlook it. Indeed, the FCA has stated that the information gathered “may evolve into a regulatory reporting requirement in the future”.
Most importantly, the onus is on financial companies to find solutions that prove their adherence to the duty. It is they that will be held accountable if they do not.
The role of data archiving
UK financial companies may well be concerned by the lack of definitive guidance accompanying this new wave of regulation. Fortunately, technology already exists that will aid compliance.
Through communications archiving, companies can capture all customer-facing interactions, enabling firms to measure, assess and, when necessary, tweak elements (whether linguistically or through digital architecture) to improve consumer outcomes. As a reminder, the four key factors identified by the FCA are: products and services, price and value, consumer understanding, and consumer support, all of which can be effectively managed through archiving.