We’re now three months on from the new Consumer Duty coming into effect in relation to new and existing products and I think this is a good moment to take stock.
At the beginning of this month, the FCA’s Director of Cross Cutting Policy and Strategy gave a speech on Consumer Duty, in which she highlighted that the benefits for consumers can already be seen, with firms introducing a variety of accessible communication formats, simplifying the language used in letters, adding more upfront information about products to their websites and reviewing fees with a focus on fair value, as just a handful of examples. I’m sure you have similar changes happening at your organisation and will be seeing improved customer outcomes as a result.
This has been one of the biggest regulatory changes of the last decade, and a huge amount of work has happened across the industry over the last 18 months and more to reach this point. Which is why I think it is timely to focus on what’s still to do.
Consumer Duty is not something a firm can say they have “done” and move on from – this is an ongoing new paradigm for how the Financial Services sector in the UK exists and operates. Many firms have absolutely understood and embraced this, focussing their culture and systems on positive customer outcomes, continuing to embed Consumer Duty throughout every aspect of their work. The big question right now is – how can you evidence that? How would you prove to the FCA that you’re continually enacting the values of the new Consumer Duty?
Positive customer outcomes need to be measurable. The work you’ve already done to align with the new rules needs to be assessed, tested, understood and evidenced. Gathering data and MI will continue to be crucial, as will monitoring activity – but these need to be seen as part of a bigger process, rather than an end in themselves. How can you use the MI to continue improving your products? Are you gathering the right data? Is the monitoring work looking at the right areas?
An attitude of continuous improvement will, I think, be what the regulatory wants to see going forward. A cycle of assessment and meta-assessment, always with the goal of delivering the best outcomes for customers. Outcoming Testing will be particularly important as the FCA looks for tangible evidence that your firm’s Consumer Duty work is functioning as it should.
Over the last 18 months, we’ve been supporting a number of firms with a wide range of Consumer Duty needs, including preliminary assessments, training and ongoing advice and assistance. We are working with consultants who can guide your business through these next steps who have strong experience of driving continuous improvement, designing regulatory solutions, helping to embed Consumer Duty throughout complex businesses and supporting the development of meaningful management information across all products and services.
If you want to have a confidential conversation on how we can help to set your firm on the right path with your next steps, please drop me an email firstname.lastname@example.org or call on 0121 643 2100.