Consumer duty is not a “once and done” exercise an FCA director has cautioned, three months on from the rules coming into force.
Speaking at an event this week, Nisha Arora, director of cross cutting policy and strategy at the regulator, said good practice in financial services has already been seen but the work needs to be ongoing.
So far, she said, firms have simplified the language in customer communications, been upfront about exclusions so customers can understand whether a product meets their needs and have reviewed their fees with fair value in mind.
Arora said: “The work to embed the duty has only just begun. The consumer duty is not a once and done exercise. If we want to continue to see the benefits, we all need to keep a foot on the gas.”
>The duty will remain a top priority for the FCA in how we make financial services markets work well
The director said the new regulations need to become part of how firms work across the business from product design to customer support.
She said it is important the duty isn’t just seen as a compliance exercise but creates a shift in culture throughout firms.
"And the shift has to endure. This means that you need to make sure you’re assessing, testing, understanding and evidencing the outcomes your customers are receiving – on an ongoing basis," Aarora said.
"Where we have seen firms doing this well, they have focused on the outcomes they are aiming to deliver. And they have identified the data they need to measure and monitor that these outcomes are delivered.
"Where firms are not meeting our expectations, it’s often because they are just repackaging existing data and haven’t thought seriously about what information they would need to really understand consumer outcomes.
"And I would stress that firms who haven’t considered how they will monitor outcomes for different groups of consumers, including those in vulnerable circumstances, will need to do more to meet our expectations."
Three months on from the roll out of the new regulations, Arora looked at what was next for firms when considering consumer duty.
She said: “You need to go back and review your implementation plan, and check you’ve made the changes you set out to make.
“Then ask yourself whether these changes go far enough. Make sure you are focused on whether you are delivering the outcomes you set out to achieve for the consumers in your target market, especially for customers with characteristics of vulnerability.”
Part of the rules include that at least once a year a firm’s board must review and approve an assessment on whether it has delivered good outcomes for customers.
On July 31 next year, the duty will be applied to closed products and services.
Arora added: “The duty will remain a top priority for the FCA in how we make financial services markets work well. And it’s central to our transformation to becoming a more assertive regulator with an enhanced focus on how we use data.
