FCA Warns Firms To Update New Consumers Tech Regulations
The UK’s Financial Conduct Authority sent a warning shot across the bows of companies getting ready for the new Consumer Duty rules, saying that some of them are falling behind in their preparations and not fixing a lack of technology resources.
When the Duty goes into effect in six months, banks and other financial institutions will have to do a lot more to protect their customers. In order to get ready, the FCA has published a review of how firms plan to implement the changes. It found that many have set up long-term plans to make sure they follow the rules correctly.
However, others have fallen behind in their planning: “We recognise plans were likely to be high level given the early stage at which we reviewed them,” says the FCA.
“Nevertheless, we saw some plans that suggested firms may have considered the requirements superficially or are over-confident that their existing policies and processes will be adequate.
We urge firms to carefully consider the substantive requirements of the duty, as set out in our final rules and guidance. Firms should ensure that, when they are reviewing their products and services, communications and customer journeys, they identify and make the changes needed to meet the new standards.”
The review says that some plans said they didn’t have enough money or technology, but they didn’t say how they were going to fix this.
The watchdog also warns that if companies think they can “get by” by mostly repackaging or adding to data they already have. They might not think deeply or differently about the types and levels of detail of data they will actually need to monitor and prove the results of the duty.
The CEO of the company SaaScada, Nelson Wootton, says:
“Any firm who assumes they can ‘get by’ on Consumer Duty compliance with their existing data is burying their head in the sand so deeply they’ll end up in Australia. Financial services organisations are being asked to achieve an unprecedented level of visibility, with granular real time insights into customer spending and outcomes so that they can understand customer needs, assess their financial health, and make recommendations effectively.”
This means completely re-designing how core banking services are delivered, using the cloud and automation to bring together data points and build a good picture of each customer to prove that their products are serving them well.
