Bankhall is urging firms to identify and review emerging risks within their business in light of the FCA’s increasing focus on Retail Conduct Risk (RCR).
The provider of professional support services to 5,000 directly regulated financial advisers has launched a new RCR Assessment Tool as part of the practical guidance it offers.
Conduct risk is viewed by the FCA as any current and emerging risks to consumers as a result of a firm’s behaviour. Bankhall explains there are strong links to Treating Customers Fairly (TCF), as both are focused on customer outcomes, but TCF tended to focus on risks that have been realised, that is, consumer detriment was already happening. With RCR there is a greater emphasis on identifying potential risks that have not yet resulted in poor outcomes, but could do so in the future, Bankhall said.
Bankhall’s new RCR Assessment Tool has been designed to help firms identify the main conduct risks in their business. For any gaps, firms document the actions needed to mitigate the possibility of poor customer outcomes in the future. This document can then be retained to evidence to the FCA that their firm has considered conduct risk and acted accordingly.
SBG Managing Director, Stephen Gazard, said: “The FCA is sending out a clear message and firms need to ensure they take action to protect themselves and their customers. The regulator has always been concerned with how firms conduct their business and in particular the way products are sold. However, with RCR the FCA’s focus has shifted and intensified, becoming more intrusive to ensure that fair outcomes are delivered to customers.
“There is a greater requirement on firms to look at risk from the customer’s perspective and ensure that good outcomes are being delivered and evidenced – both now and in the future. It is important that firms factor this in to their strategy as their business model evolves.”
To highlight the importance of RCR, and the practical supporting guidance available to help firms, Bankhall is currently running a series of nationwide workshops where its team of regulatory experts are delivering valuable face to face support to adviser firms. This includes exploring some of the main risks that exist within a firm’s proposition and services, its sales process, its ongoing relationship with customers and its overall governance and culture.