Two years on from Consumer Duty advice firms must recognise their response will never be ‘done’, says Michael Shand, Managing Principal at financial services consultancy, Capco.
Two years on, Consumer Duty has clearly been a positive step for both the financial services industry and consumers. Customer outcomes are now firmly embedded in the regulatory and strategic agenda across financial services, and we’ve seen genuine progress. Many firms have taken meaningful steps to adjust charging structures to deliver better value, simplify products and communications to help customers navigate complexity, and proactively engage with customers to support better outcomes – for example, helping those stuck on low-interest savings accounts. The FCA’s emphasis on delivering good outcomes for vulnerable customers – especially in the context of the post-COVID cost of living crisis and the Duty’s introduction – is particularly notable and has genuinely raised standards of support for those who need it most.
That said, the journey is far from complete. While firms that have truly embraced the Duty and embedded it into their culture are already seeing real benefits, others – who have approached it primarily as a compliance or regulatory exercise – have found themselves bogged down in governance-heavy tasks, such as traceability logs and extensive reporting processes. Not only does this mean compliance quickly becomes a slog, disengaging employees, but those taking such a tick box approach also risk missing out on significant opportunity to generate meaningful product and service insights.
Looking ahead, it’s essential that firms recognise that their response to the Duty will never be ‘done’. Continuous improvement is a core expectation and it’s essential that firms see embedding the Duty into day-to-day operations as a top priority. That means continuing to:
- Invest in data and insights to understand and evidence good outcomes
- Train all staff on how to design and deliver those outcomes
- Ensure governance processes are effective and capable of identifying and evidencing opportunities for improvement
Firms should be actively exploring how they use technology, data (including consumer research), and their people to keep raising standards. There are plenty of opportunities to do this – and those that do it well will not only satisfy the regulator but also unlock real commercial benefits.
The ability to pinpoint and evidence ongoing, continuous improvements will be essential, demonstrating, period by period, where progress is being made and customer outcomes are being enhanced. Good customer outcomes must be woven into the fabric of everything the firm does, and leadership and boards must challenge themselves to ensure they are driving the cultural shift required. Ultimately, all stakeholders – customers, employees, boards, and regulators – should be able to clearly see that the Consumer Duty sits at the heart of the firm’s strategy, services, and products.
