What is the issue?
The operational resilience of all firms is now being significantly tested, across people, systems, controls and processes. All firms are experiencing some kind of issues to manage or at least be mindful of, and the crisis is also throwing up new and different challenges to meet. Retail customers can be particularly affected, and fair customer treatment is now brought into sharp relief. Expectations around this will evolve as the crisis does, and being both agile and consistent will be very important for firms over the coming period.
What has the regulator said?
From a principles basis, there are broadly six key stages recognised by regulators:
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Map |
Assess |
Test |
Invest |
Communicate |
- Services that are key.
- Consider acceptable tolerances for them.
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- Supporting processes.
- Consider how to manage each one to prevent exceeding tolerances.
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- How the failure of an individual system or process could impact critical services.
- Consider the role of outsourced providers.
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- Using (plausible but severe) scenarios.
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- In the framework on an ongoing basis.
- Feed into a continuous improvement process.
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- In a timely manner both internally and externally to help manage stakeholder expectation and allow them to make informed decisions.
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These are also reinforced by various communications from regulators, including the recent FCA Business Plan.
What are the practical issues in play?
Key overall considerations
- Have clear and consistent regular governance meetings and discussions as the crisis develops. Ensure that retail customer outcomes are fed through in management information and reporting.
- Regularly review response plans so that customer feedback and evolving areas of focus can be factored in.
- Ensure a consistent protocol is in place (with appropriate guidance) for evidencing key decisions on customer outcomes and how and when to escalate matters. This is particularly important in terms of accountability regimes such as the SM&CR.
- Be clear, consistent and joined-up with public and customer communications.
- Make communications regularly, so they can be tailored quickly as the situation evolves.
Short-term factors
- Review your products and services from the perspective of the virus and identify areas of potential customer harm. Enhance and develop your customer handling processes accordingly.
- Ensure there is an agreed process for engaging with customers, the types of assistance that can be generally provided, and what specialist teams are needed are in place across the organisation.
- Understand that regulatory expectation will evolve and may not (at least initially) capture all products in the same way. Think carefully about being consistent and also rationalising decisions for doing things differently.
- Some regulatory expectation may not (as yet) align directly with legal requirements, for example in consumer credit. Engage with regulators where appropriate and clarify expectations.
Medium- and longer-term factors
- Ensure risk and governance policies continue to be fit for purpose, conduct regular reviews.
- Keep close oversight over outsourced providers and third parties.
- Deal fairly with recoveries at all times, practices will be retrospectively reviewed.
- Keep “fairness” under review, for example not recovering when it is actually in the customer’s best interests could create unfair outcomes and detriment over time.
