Only 41% of adults have confidence in the UK financial service industry according to the latest Financial Lives Survey conducted by the FCA.

This alarming statistic comes a year on from when firms first built and scrutinised their Consumer Duty implementation plans. And now, regulated businesses are being reminded that the Consumer Duty is not a ‘once and done’ exercise as outlined in the recent speech from the FCA’s Director of Cross Cutting Policy and Strategy Nisha Arora.

As firms work on embedding the Duty, it’s an important time for businesses to make sure the changes they’ve identified in the planning phase are now well underway. Beyond that, it’s essential to consider – do the outlined changes go far enough to achieve good customer outcomes?

The Consumer Duty isn’t something you can simply mark as done – it needs to become part of who you are as a firm, your culture and how you do business.

• The Duty needs to be applied across your whole organisation from board level right through to front-line delivery – including product design, communications and customer support
• Senior managers need to assess whether consumers are at the heart of the business. This includes considering whether your firm’s long-term strategy is consistent with the Consumer Duty and how this impacts good customer outcomes
• It’s critical that throughout implementation, firms are continuously learning and improving. This should be done by assessing, testing, understanding, and evidencing the Duty outcomes on an ongoing basis. And it’s vital to remember that you should be delivering the outcomes you set out to achieve for those in your target demographic – whilst paying particular attention to those considered to have characteristics of vulnerability
• Where risks are identified in achieving good outcomes for customers, it will be crucial to demonstrate what detective and preventative controls you’re putting in place. And on the flip side – what is your firm’s strategy for ‘drilling down’ into the root causes of poor outcomes and ‘closing the loop’?
• Data and monitoring should form an important part of a firm’s long-term strategy for Consumer Duty success. Have you identified the data you need to measure and monitor the delivery of outcomes and what does your long-term strategy for this look like? Is this data in a format that informs the board and provides comfort that good customer outcomes are being achieved for the purposes of the annual assessment?
• It’s vital to consider what data your firm currently collates and how this can be channelled effectively to improve your products and services, whilst evidencing the all-important four outcomes. Now is a critical juncture to take stock – if there’s data that’s lacking in your firm’s processes how will this be remedied?
• From the 31st July 2024, the Consumer Duty will also apply to closed products and services, so it’s also vital to ensure that your legacy book of business aligns to the Duty. Whilst a lot of the heavy lifting will have been completed in the day one activity, there are additional steps and a differing approach to be considered.

Nisha Arora described the Consumer Duty as the “golden thread” that will run through all conversations that firms have with the regulator. In the coming months, the FCA has been clear that they will now test how firms have implemented and embedded the Duty across their full business life cycle – promising swift and robust action against businesses that aren’t doing what is required.

The FCA’s supervisory and enforcement approach will be “proportionate to the harm, or risk of harm, to consumers… we will prioritise the most serious breaches and act swiftly and assertively”. And it’s likely be driven by MI collated from firms, so it’s important to get yours right.

In this undeniable time of transformation for firms and the regulator alike, it’s a vital period to take rapid action if there’s elements of your Duty stance that you’re not comfortable with. Appointing independent regulatory expertise to review your firm’s approach to embedding the new regulation can be a diligent step to take – and TCC’s subject matter experts are on hand to support you.

Implementation progress review

Our skilled team can review your implementation progress, either by specific areas of risk or from beginning to end. We’ll highlight any areas of potential harm in the customer journey and work with you to put the mitigating preventative or detective controls in place. We can also look at your approach to customer outcomes monitoring, ongoing fair value assessments or customer communications testing – all likely to be the first areas of focus for the regulator.

Annual Consumer Duty Assessment

As the FCA has been clear to highlight, a firm’s annual Consumer Duty assessment will form part of the evidence that considers a firm’s level of compliance. Our experts can assist with your approach to the annual assessment or provide a post implementation audit. This will help leave no stone unturned in terms of your compliance strategy to deliver the best outcomes for your customers.

Embedded data strategy and outcomes evidencing

The important role of data is continually spotlighted by the regulator as a crucial tool to leverage when assessing, testing, understanding and evidencing the outcomes that your customers are receiving. Our subject matter experts can guide you in developing an effective monitoring strategy that gives you deep oversight of your entire business to drive actionable insights.

With the stakes so high, maintaining compliance to the Consumer Duty is a significant task for any firm. Get in touch today to learn how our team of industry experts are ready to help.