The Financial Conduct Authority has warned financial services firms that the Consumer Duty isn’t a ‘one and done’ box-ticking exercise.
Nisha Arora, director of cross cutting policy and strategy at the FCA, said the Consumer Duty needs to become embedded within firms, from board to front line delivery, and product design through to communications and customer support.
Arora said: “To meet the shift in expectations required by the Duty, you need to ensure that your customers’ interests are central to your culture and purpose and that this is embedded throughout the organisation, in your strategy, governance, leadership and people policies.
“It’s really important that this isn’t just seen as a compliance exercise but creates a shift in culture throughout firms. And this shift has to endure.”
To remain compliant, firms will need to make sure that they’re assessing, testing, understanding and evidencing customer outcomes on an ongoing basis. For many firms, this has required a “significant shift” in both culture and behaviour, says Arora.
“Where we have seen firms doing this well, they have focused on the outcomes they are aiming to deliver. And they have identified the data they need to measure and monitor that these outcomes are delivered,” Arora continued. “Where firms are not meeting our expectations, it’s often because they are just repackaging existing data and haven’t thought seriously about what information they would need to really understand consumer outcomes.”
Arora warned that firms who haven’t considered how they will monitor outcomes for different groups of consumers, including those in vulnerable circumstances, will need to do more to meet FCA expectations.
“The work you carry out should enable you to ensure and evidence that you’re delivering good outcomes and to highlight where there are poor outcomes. And where you identify these, you need to take appropriate action to rectify the causes.”
She added: “We want to see firms learning and improving continuously. If you’ve not looked in detail at your customer’s experience and aren’t monitoring outcomes for customers, including different groups on an ongoing basis, we’ll be doubtful that you’ve got to grips with this.”
