Consumer protection has become a top strategic and cultural driver and leading contributor to a company’s future success.
Consumer protection has become a top strategic and cultural driver and leading contributor
Conduct risk is broadly defined as any action of a firm or individual that leads to consumer / investor detriment or has an adverse effect on market stability or even competition.
Over the last number of years, the Central Bank of Ireland increased their Regulatory focus on conduct and culture as a result of significant misconduct identified at financial institutions. This focus has resulted in enhancements to the CPC, improved protections for mortgage holders in arrears, enhanced regulation for SME’s, changes to macroprudential lending limits, the introduction of desired consumer protection outcomes and the adoption of a Consumer Protection Risk Assessment (“CPRA”) Model to enhance its supervisory approach for regulated firms in relation to conduct and consumer protection risk management. There has also been significant focus at EU level with the introduction of new legislation / enhancement to existing legislation (e.g. PRIIPs, MiFID II, EMIR, MCD, IDD etc.). The CBI have made it clear that they will be conducting more intrusive Conduct and Culture inspections as a result of the misconduct in the financial services industry cross all sectors, including Wholesale Markets.
Now more than ever, a firm’s future success may well depend on how effectively it can meet the challenge of enhancing consumer / investor protection. Firms that fail to see the importance of conduct risk may face regulatory action, fines and significant reputational damage which can harm an organisation for years beyond the event.
There is a heightened Regulatory Focus on Risk Culture within organisations over the last number of years as a cause of business failure and a key driver of conduct risk. Organisations are increasing their focus on culture and behaviours of employees within their organisations to understand what the drivers of good and bad behaviour are. Furthermore, ffollowing the Report on the Behaviour and Culture of the Irish Retail Banks in July 2018 (following the findings of the Tracker Mortgage Scandal), the Central Bank of Ireland are actively focused on conducting culture inspections of regulated financial services providers. The Central Bank will also soon introduce the Individual Accountability Framework aiming to improve customer outcomes by improving accountability within the organisation. For more information click here.
How can KPMG help?
KPMG’s conduct risk & culture professionals can help financial services organisations transform regulatory compliance and consumer / investor protection into a strategic business advantage.
We have significant experience across a wide variety of industries in the following:
Effective Risk Culture is key the successful implementation of conduct risk framework, we can assist you in determining the steps to take to embed this culture across your organisation.
KPMG’s Risk Consulting department has extensive conduct risk & culture experience across all financial services industries and with KPMG, you can have confidence that you’re partnering with the best team in the market, with unrivalled experience, insight and commitment. We incorporate the latest global thinking into the provision of our services in the financial services sector and provide best practice advice.
To find out more about the work we do and how we can help you – get in touch today. We look forward to hearing from you.