Aegon has called for a phased implementation of the FCA’s £2.4 billion New Consumer Duty, highlighting the FCA’s ambitions to enhance how companies assist customers in attaining financial goals.
Aegon advocates for a phased strategy guided by a rigorous gap analysis at the firm and industry levels. Aegon has also set out a range of areas where it believes the FCA could support effective implementation by providing further guidance.
The FCA has recommended date of April 2023 for implementation, which is nine months after the final rules are expected to be published in July 2022.
Aegon has urged the FCA to make issuing promised sector-specific guidance a priority so that enterprises have a full understanding of where the FCA expects the most change in their industry. Distributors, pensions manufacturers, banks, general insurers, investment managers, and others are likely to differ on this. Firms will be able to prioritise deployment and deliver consumer benefits more swiftly as a result of this.
While the industry will be starting a gap analysis exercise soon, Aegon says that it needs time to react to the final rules, which the FCA estimates will cost £2.4 billion, before beginning implementation. It has also emphasised the importance of coordinating change implementation across what is frequently a complex distribution network.
Aegon pensions director Steven Cameron says: “The new Consumer Duty is a hugely important multi-billion pound initiative and it’s important it’s delivered well. Against an already packed regulatory agenda, the timescales the FCA is proposing look very ambitious. The FCA is clear in its expectation that the new Duty will involve a fundamental change in industry mindset and a reset in conduct and culture. We support this and believe rushing implementation risks a more superficial approach.
“The implementation of an initiative of this scale and complexity would benefit from being split into phases. The first should be a thorough gap analysis and while this should be starting now, firms will need time to review and adjust once final rules are published in July. Only then can implementation plans with realistic timelines be created, allowing changes and gaps to be addressed in a meaningful and coordinated way. We see a strong case for prioritising actions based on customer benefits, with longer timelines for lower impact changes.”
Cameron adds: “The new Duty changes the roles and responsibilities of different players across the distribution chain and how they need to work together to deliver good outcomes. This is one area where we believe the FCA can play a vital role in supporting effective implementation. We’re calling for the FCA to develop a replacement to its RPPD guidance document, enhanced to cover the wider remit of the Duty and to include platform service providers and fund managers. This will also aid consistent understanding of roles across the chain, and could also facilitate a common approach for manufacturers and distributors to share information and data on value assessments and target market definitions.”