Consumer Duty One Year On: Companies Are Moving Forward

Here’s some feedback on the Consumer Duty, after a year in operation, from Michael Shand, Managing Principal at financial services focused technology and management consultancy, Capco:

“Consumer Duty has been a positive step for the financial services industry. The last year has demonstrated the potential for change that puts customers front and centre, challenging firms to be more creative and innovative in delivering better customer outcomes. Despite these positive developments, the journey is ongoing and it will take time to ensure the entire industry shifts its ways of working to fully achieve the cultural transformation intended by the FCA.

“Wednesday marks not only the Duty’s one year anniversary, but also the introduction of the regulation for closed products. Firms will also have delivered their first annual Consumer Duty board report, evidencing that they have met the requirements of the Duty and are also making progress on delivering good outcomes for their customers. These reports will be crucial to measuring the success of the Duty and conveying confidence to boards and the regulator. They also set clear priorities for the coming year. We believe firms should be particularly focused on:

• Continued data improvements – Firms should not underestimate the need to continuously improve insights into customer outcomes using better data. The FCA are increasingly data-driven and are looking for firms to continue to build on and improve the data that they are using. Management and boards should assure themselves that underlying data is sufficiently granular to provide customer-cohort-level insight, and that there are robust actions in place to address areas of customer harm.
• Demonstrating improved customer outcomes – This will be the first annual report of many for firms complying with the Consumer Duty and the FCA will be looking to see firms’ commitment to a journey of continuous improvement. Therefore, it is vital that firms stay focused on the areas they have set out in their annual consumer duty board reports so they can demonstrate, and evidence progress in a year’s time.
• Continued engagement with the board – The ongoing embedding of the Consumer Duty into the culture of the firm is critical, and regular engagement with the board throughout the year is an effective way of helping ensure focus and strategic alignment. It will also help ensure focus on the priorities for improving customer outcomes set out by the firm, and make ongoing process for the annual consumer duty board report more effective.

“While this past year has been groundbreaking in the FCA’s drive for better outcomes, the full impact of the Consumer Duty will only emerge over time. The stories and evidence that firms collect, both in their board reporting efforts and beyond, will be vital in measuring this progress – and not just at a company level – but also across the financial services industry as a whole.”