The consumer duty forms part of the regulator’s strategy to put consumers first and leadership within a business will be key to making sure a firm succeeds with this, the FCA has said.
Speaking at the Financial Conduct Authority’s annual public meeting today (October 4), Sheldon Mills, executive director, consumers and competition at the FCA, said the regulator was asked by Parliament to introduce the highest standard of care for consumers and that's what the consumer duty seeks to do.
The consumer duty has been enforced for existing and new products since July of this year and there is an additional deadline for closed products for July 2024.
Considering the early insights of the duty so far, Mills said: “The first thing that firms need to do is to continue on that journey of embedding the duty but also looking towards that deadline for closed products. That's important.
“My only early reflections on the consumer duty are one of thanks to firms across our regulatory state.
“All firms have engaged with the duty, all of our surveys demonstrate that firms large and small have engaged with the duty and gone on that journey so that we can improve outcomes in financial services for consumers. But there's still more work to do.”
Mills said the FCA is doing work immediately in relation to the duty and “it's at the heart of its work”.
He explained there are two things firms need to do to get the consumer duty right.
“Firstly, leadership,” he said. “This is about a change in mindset within firms and the best firms have been ones where leaders from the board and throughout the firm have engaged with the duty so continuing with that will be important.
“The second thing is that the duty seeks to invest in outcomes so we're seeking to get improved outcomes for consumers.”
The outcomes range in scope. For example one outcome is that there are products and services which meet the needs of customers, another is that customers can get the right support when they need it and importantly, that consumers get fair value.
“There's a good relationship between the cost of providing a service and the value that a consumer gets from it,” he said.
“What we're asking firms to do is to invest in the data that they collect and analyse it in order to continually improve outcomes for customers.”
Mills explained that data and a metrics journey is a key reflection that it has seen firms need to continually improve upon.
“We're pleased with the progress so far in relation to the duty but as I mentioned, it's not over yet,” he added.
“It's not a once and done it's now with us in terms of embedding, and we still have the July 2024 deadline to ensure that we're meeting the obligations in relation to close products.”
Supervision from the FCA
The FCA said from a supervisory point of view, it has seen big improvements in the way that firms are focusing on consumer outcomes, both from the top at a board level and through organisations.
