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A redress scheme mechanism to automatically compensate consumers for losses or harm. They are typically imposed when the regulatory body identifies the consumers were impacted due to either regulations not being met, or due to practices which are not considered ethical were conducted. As a redress scheme can be considered to be a drastic approach to repatriate those impacted. It typically is only imposed when widespread systemic issues have been identified.
The most important factor of the scheme that differs it to that of a compensation approach, is that the onus to identify impacted consumers is on the financial service provider rather than the consumer themselves.
For such a scheme to be imposed their must be clear rules to cover the specifics of those included both in regards to the organisations involved and the consumers to be reviewed.
Such rules will likely cover:
The types of organisations impacted
The types of customers impacted
The period of time customers have been impacted by this and so should be compensated
The products which fall into the remit and the conditions which must be met in relation to these
The current redress scheme as proposed by the FCA is focused on the automotive industry for commissions paid to dealers without the consumers knowledge.
Though the outcome of the hearing is as of the time of writing still being awaited. The key aspects of what would likely be included are around the product types, the commission types, the time period and the types of customers impacted.
This is expected to only cover purchase products such as Hire Purchase (HP) and Personal Contract Purchase (PCP). Leasing products are not expected to be included.
All commissions are expected to be covered though the main focus at this point is Discretionary Commission Arrangements. These differ to normal base rate commissions as it is coupled to the interest rate charged. The broker typically inflates it to be above the base rate to increase their commission.
The expected period the contracts were taken out and so likely to be covered are between is 6 April 2007 – 28 January 2021.
Personal individuals is the main focus, however business customers under certain conditions can be in scope.
Data Domains
Data Integrations and Transformations
System and Data Landscape
Wider Business Capability
Each organisation is different, as a result will need to consider different types of data to identify those impacted. This may also change over time within the same organisation. The types of data records needed to support this activity may include product or campaign information, legal agreements, contracts, financial records, etc
As a result of multiple record types, and formats of the data the structure of this data including similar records will likely differ. However, to effectively process and complete further analysis. Complex integrations and data transformations are needed to bring the disparate data sources into a single view.
Over the time period being considered by the hearing. Processes and data capture mechanisms would likely have changed within the organisation as technology has advanced and become more embedded within the industry. In addition to this due to the age of the data it is likely that it has also been archived.
This leads to possibly the most challenging aspect required to achieve the outcome. Some of this may be in legacy applications or data stores, archived in cold storage, or in a physical form.
This is a broad analysis which would need to be undertaken as this would need to review skills, resource and system capability. However, this needs to be weighed up against the timeframe to identify and/or repatriate consumers which will be set as part of the outcome of the hearing.
It is clear that both production systems and archived data will need to be brought together. However, as systems have likely been replaced, organisation splits and mergers have likely taken place identifying systems, data and required integrations is a challenge.
Identifying the production systems may be the simpler tasks. However, understanding the data available in these systems and getting easy access to it may be a challenge. Transactional systems such as Contract Management Systems, Master Data Management, Point Of Sale, Finance should be well understood in the systems. However, the ability to extract data from these systems may be challenging, or alternatively it may be received from external entities.
Business Intelligence (BI) or Analytical systems will have a wealth of data which likely has already been transformed, understanding what is already available in there and the format in which it's in is a time consuming task. This is often a less understood area within business' and maybe separated based on the data strategy in place at the time, therefore data may exist in data marts, warehouse, lakes, mesh’s etc. Having clear owners of the systems and data in the organization should be part of the enterprise and data strategy.
What technologies could be used to create a single view of the data. This would also include an array of data ingestion, integration and transformation capabilities, and be inline with the current or future integration and data strategy in place. Understanding your maturity and capability around these will be key. Ensuring data is correctly labelled, key attributes assigned to it. How is presented to users in a reportable and user friendly format, whilst in a restricted manner.
Leaning on our expertise in data and solutions architecture on large scale and complex system landscapes, we offer expert guidance from the initial data requirements through to efficient mechanisms of contacting the consumer. Ensuring the correct data, integration, and application architecture and strategy is in place, we also develop the foundations for future data capabilities in accessing existing data, data management and solution capability.