News

In the below article, Simon Hynes, one of Fund Boards Council (FBC)’s Senior Advisers, shares his thoughts on some of the Financial Conduct Authority (FCA)’s recent Consumer Duty-related publications that are relevant to fund boards, as well as recapping some of FBC’s recent events and research.

If you are facing challenges with your Consumer Duty reporting, please contact FBC at contact@fundboards.org

“The FCA have certainly been busy of late when it comes to Consumer Duty-related publications. Here’s a quick recap, with links to the relevant papers and digital events, for those of you with Easter homework plans.

Our first FBC digital event of the year focussed on the role of the fund board’s Consumer Duty Champion, however, on the very same day, Nikhil Rathi’s letter to Sir Kier Starmer confirmed that the FCA would in fact remove the requirement for Boards to have a Consumer Duty Board Champion. While this requirement may be discontinued, the responsibilities of fund boards to ensure the CD rules are met will clearly remain, so the lessons learned and messages from our digital event should remain very relevant to fund boards, whether or not they continue to have a champion.

In other FCA news, in the last few weeks the FCA published some further guidance on Vulnerable Customers. These good and poor practice notes are an easy read and very useful for those of us involved in fund governance. What some of you may not have noticed was the simultaneous release of some Vulnerable Customer research conducted for the FCA by Critical Thinking. Again very useful to have free, external insight to help our non-executive director audience maintain their independent view on topical issues like this. One statistic really stood out from this paper. ‘Only 39% of firms had formal governance bodies or committees that oversee and can influence outcomes for customers in vulnerable circumstances.’ The clear intimation is that this should be higher. One to discuss if your own firm is not one of the 39%.

We know many member firms are looking to expand their presence in Private Markets, hence the FCA’s paper on Private Market valuation practices was also very timely. Governance processes were a key factor again from the FCA, seeking ‘clear accountability for valuation and robust oversight of the valuation process’. It will be interesting to see how investment committees evolve generally, how much information comes to the board and whether the remit of iNEDs expands to include membership of such committees.

But what else has FBC been up to? Well, earlier this month FBC Senior Adviser, Brandon Horwitz, ran a very well attended digital meeting on Investment performance oversight as part of AoV. Investment oversight is a crucial component of Assessment of Value for fund boards and a clear read across to other entities overseeing consumer outcomes where investment performance is a key element. During the event, Brandon shared key takeaways from FBC’s latest research, followed by some thoughts from the FCA’s Chris Douglas. The full research report will be sent out to FBC members within the next couple of weeks.

Looking ahead to later this year, FBC digital events for members will delve deeper into two other component areas of Consumer Duty. In June, we revisit Distributor Oversight, an area that continues to frustrate asset managers, and in Q4 we will examine what firms are doing around Consumer Understanding. Invites will be sent nearer the time, but feel free to register now to ensure they’re in your calendars. As always with these events, we will aim to share insights based on research and member experiences, always through the lens of the fund board.”