Mortgages

Consumer duty ‘at its heart is a culture shift’


The incoming consumer duty is more than a box-ticking exercise and should be viewed by firms as a complete culture shift, according to Royal London.

Speaking to FTAdviser, Jamie Jenkins, director of policy at Royal London, said this year will see the full implementation of the Financial Conduct Authority’s new consumer duty. 

“Critics will say this is an expensive, box-ticking compliance exercise, and there is certainly a danger it becomes that,” he said.

Article continues after advert

“At its heart, though, it’s a culture shift. One which should move the industry from a mandate to treat customers fairly, to one that focuses on treating customers well, and demonstrating that they are doing so. That has to be a good thing.”

The implementation period for the consumer duty lasts till July 2023 for new and existing products and then there’s an additional year to July 2024 for back-book or closed products. 

In that implementation period, firms need to undertake the value assessments of all their products using the data and evidence about whether they are fair value or if not, then make necessary changes to the price or structure of the benefits to ensure that customers do receive that fair value. 

The FCA has said that it is planning a programme of supervisory and if necessary, enforcement work to ensure that firms have implemented the duty correctly.

Normalised markets?

Jenkins noted that for all the doom and gloom of the UK’s economic position, markets have responded to the stability now after a month or two of the jitters.

Jenkins said he hoped this stability will continue in 2023 with more normalised market forces at play.

“There will be increased focus on how investments support growth in the economy, both through the implementation of Solvency II changes and a likely renewed focus on the use of pension assets for long term investment,” he said. 

“Long Term Asset Funds (LTAFs) may well have their day.”

Meanwhile, Jenkins said as responsible investment continues to come of age, disclosure of ESG characteristics and the labelling of funds will be a major area of focus for the industry and its regulators.

“Pensions have been largely untouched from a policy perspective in recent years, following the heady days of automatic enrolment and the freedom and choice reforms,” he said. 

“Workplace pensions held up well during Covid, in large part thanks to their inclusion in the furlough scheme, and they look to be resilient to the inflationary challenges we face now. 

“However, we are only in the foothills of the cost-of-living crisis and a cold winter and rocketing heating bills – allied with spiralling mortgage costs – could leave people searching harder for monthly expenditure they can cut back.”

The state pension triple lock survived against all the odds, promising a 10.1 per cent rise for pensioners in April.



Source link

Leave a Response