Q&A: What the FCA Consumer Duty means for marketers

Vaughan Jenkins is Business Development Director at Moneyhub. With a background in management consultancy, he has been an Advisory Board member of the UK Financial Capability Strategy and has led consulting projects for the FCA, including the set-up of the Regulatory Sandbox.

In this Q&A, he discusses the FCA’s new Consumer Duty and some key takeaways for marketers.

How significant is the consumer duty?

As the consultation paper stated, the regulations represent a paradigm shift towards outcomes focused regulation.  Others have commented that it is a landmark in consumer protection and it certainly raises the bar compared to the previous Treating Customers Fairly initiative.

This regulation is what the industry deserves after decades of product pushing resulting in chronically poor customer outcomes, as the FCA consultation paper highlighted. Firms need to turn their supertanker towards customer centricity and the fuel needed for that is consent-based data.

That is a big problem for siloed information architectures, without engaging front end systems and a patchy history of implementing any data standards that will enable customers to leverage their records. Knowledge is power but that needs to be turned to good outcomes and away from exploiting the asymmetric nature of customer relationships.

What does the regulation say?

It sets an overarching principle of what is expected together with a cross-cutting set of rules and four areas of consumer outcomes, including product, price, service and communications.

Are there any surprises in the proposals?

As the principle of fairness was first established back in 2006, the regulations represent the culmination of several disparate changes and guidelines issued in the interim period, including vulnerability and suitability checks; fair value pricing; product disclosure and financial promotions etc.  Some of the language used will therefore be familiar to regulated firms.  After two rounds of consultation, the final version of the regulations corresponds with the expectations they set.

The move to July 2023 for compliance and the additional year for legacy products had also been rumoured.

However, firms will need to have completed implementation plans by the end of October 2022, which underscores that there is no room for complacency and the FCA is pressing for action.

How much of the onus of managing this will fall on marketers?

Marketing functions will be at the epicentre of the changes and what needs to be done but this will be closely coupled with the need for far more data and customer insights.  That will require a truly cross-functional response from IT to customer services and product development to sales.

The Duty is also married to the Senior Managers regime, so executives are bound to exercise proactive governance, as the buck stops with them.

What can marketers do ahead of July in order to prepare?

Marketers should have already anticipated the new regulations by conducting an impact analysis.  These need to be comprehensive and should inform the implementation plans required by the end of October.  In particular, marketers will have to consider how they are going to evidence outcomes and whether they have sufficient data for the job.

We believe that this will prompt more firms to embrace Open Banking and Open Finance solutions, such as Moneyhub, to create a value exchange with consumers, supporting mutually beneficial dialogues.  Consumers will receive personalised, relevant and practical insights and firms will get a more holistic picture of their customers and the context in which they live.

Regulation Shake Up within Consumer Duty