Firms should not consider the Consumer Duty a “once and done” exercise but must be able to evidence that they are “learning and improving continuously”, the FCA said in a speech this week.
The FCA’s Director of Cross Cutting Policy and Strategy Nisha Arora said that three months on from the duty coming into force there had been good practices introduced which revealed “the benefits for consumers and why we need to maintain momentum”.
Arora began the speech by underlining the importance of the regulation, referencing anecdotal and statistical evidence showing that people are often unable to get information they need from providers.
She praised some changes that the FCA had seen already, including firms simplifying language in communications, introducing more accessible formats for vulnerable customers, being more upfront on their websites about exclusions and reviewing fees with fair value in mind.
“Many firms have approached this in the right spirit, using data and insights to put themselves in their customers’ shoes, thinking seriously about the outcomes they deliver for customers and making real improvements to their products and services,” she said.
However, she added that the work was not over and firms would have to “keep a foot on the gas” to continue to see the benefits of the regulation.
She reiterated that people cannot simply tick the box on the to-do list and move on, but need to make the Duty part of the firm’s culture and how it does business.
In terms of what is coming next, she said that firms should consider continuous monitoring in order to show that they are delivering good consumer outcomes, as well as going back to review their plans to ensure they had been implemented.
She said this review of implementation plans should also consider whether they go far enough. She also said firms should think about their data and monitoring processes and whether they are collecting sufficient data to achieve the right outcomes.
Arora added that firms should pay particular attention to the annual board report, an annual review by the board or equivalent governing body of every firm assessing whether the firm is delivering good outcomes for customers. This would form a key part of the FCA’s assessment.
“This assessment should include the results of your monitoring on whether your products and services are delivering expected outcomes in line with the Duty – and any evidence of poor outcomes.
“And before signing it off, your board needs to agree the actions required to address any identified risks or poor outcomes and agree whether any changes to your firm’s future business strategy are required.”
She said that the FCA had recently concluded its second survey measuring small firm’s embeddedness of the Duty, with a third survey planned in the new year.
More details will emerge of the FCA’s approach in coming months, she said, with a webinar on 6 December sharing the latest thinking.
“We’re committed to working closely with you and supporting you as you continue to improve outcomes for consumers,” she said.
“We look forward to continuing to see both the benefits for consumers and also the benefits to firms and the wider economy, as your work to embed the Duty leads to better outcomes, increased trust in the sector, and greater opportunities for you to compete and innovate, and for us to regulate efficiently.”
