General insurance providers have been increasingly using dynamic product benchmarking tools as part of their response to the new Consumer Duty rules. In the period since the FCA confirmed its plans to bring in a new Consumer Duty, Defaqto has seen a 40% increase in the reports created by providers who use its financial product database, Matrix. At the same time there has also been an 81% increase in automated reporting from the database, using dynamic product benchmarking to see how products stack up against each other.
Brian Brown, Head of Insight & Consulting (Banking & GI) at Defaqto, says: “This significant increase in reporting volumes shows that firms are embracing the changes that the Consumer Duty brings.
“The new rules and guidance shared by the FCA are in part designed to ensure that products and services are designed to meet the needs, characteristics and objectives of a specified target market. Our data shows providers have been busy making sure that their products are fit for the consumers they’re being sold to, by creating target market statements for every product.
“Other key aspects are price and value. So manufacturers have been carrying out their fair value assessments as well as competitor benchmarking.
“The 81% increase we’ve observed refers to the regular, automated reports that providers use to monitor new products that have been launched, products that have been updated and any that have been withdrawn. We’ve also seen an increase in the number of recipients receiving these schedules, which indicates that the data is being used by more people more widely within each organisation.”
In July 2022 the FCA published final rules and guidance for firms, with a timeline for them to implement the Duty. By the end of October 2022 firms’ boards or management bodies should have agreed their plans for implementing the Duty. By the end of April 2023, manufacturers should have completed all reviews necessary to meet the outcome rules and shared the necessary information with their distributors.
The Duty will come into force on 31 July 2023 for new and existing products or services that are open to sale or renewal, and the following year for closed products or services.
Brian Brown adds: “We’re pleased to be supporting our customers in their efforts to meet the Consumer Duty requirements and to improve their products to compete and innovate based on high standards. We’re currently working on a new product that will help our customers to assess and rank the product features that are most valued by their customers, which will provide them with even more support to achieve these goals.”
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