Conduct Risk places greater onus on the ability of financial institutions to ensure that every decision is always made in the best interests of the customer.
It means lenders must ensure they consistently offer the right financial products to every customer at the right time – and ensure that these products continue to meet the customer’s needs during the product’s lifetime.
But it is also clear that the Financial Conduct Authority (FCA) is set to take an increasingly robust approach to regulating the sale of financial services. It intends to reach into new areas not covered by the previous regulatory regime.
Among the critical new areas of focus is a drive to ensure financial institutions aim for what the FCA calls “good profits”- obliging lenders to show they have the needs of the customer at the heart of their decision-making.
While it is clear that failure to comply could lead to heavy fines, there is far less certainty about which practices could be subject to such fines in the future. Products that are potentially legal in the moment, may lead to bad outcomes for consumers at a later stage.
Conduct Risk means that today’s profit-making products could be tomorrow’s fiscal liabilities. To find out more, read our full report by clicking here.