The FCA is not just baring its teeth where it feels firms need to do more work to demonstrate good outcomes; we’ve seen early instances of FCA challenge in practice, typified by the de-banking debate, the passing on of interest rates to savers and – more recently – the regulator's review of price and value assessments. In November 2023, the FCA also reiterated that the “real work” for firms to embed Consumer Duty and improve approaches to data collection and outcomes monitoring has only just begun. The regulator has made it very clear that Consumer Duty is now an integral part of their approach and mindset at every stage of the regulatory lifecycle – including authorisations, policy development, supervision, and enforcement. Firms can – and should – expect it to be a golden thread that runs through all conversations with them, so there is very little room for complacency or apathy to Consumer Duty at this stage.
That’s the key message from our latest webinar partner: specialist regulatory consulting firm – Square 4 – who join us for our latest instalment in our Consumer Duty webinar series on the 28 November at 11.00 am to discuss ‘Outcomes Monitoring in a Consumer Duty World’.
In this free 60-minute interactive session, Adrian Harvey, CEO of Elephants Don't Forget, is joined by Square 4's Principal Consultant, Tracy Auchterlonie, and Senior Consultant, Natalie Baglin, to help you focus on the key steps your firm must take to:
Unlike TCF, which was mostly reactive and focused on ‘input’, Consumer Duty requires firms to be proactive and focus on ‘output’. We’ll be exploring some key differences and offering some practical examples of how you can demonstrate compliance.
We’ll be exploring ways to be more objectively critical about the accuracy and scope of your data – and how to ensure that senior management is not distracted by information that isn’t adding value or providing the level of oversight they need to discharge their responsibilities.
Whilst defining your end-to-end customer journeys – from product design to after sales and service – should have formed a significant bulk of your Consumer Duty project, we’ll be looking at the key answers you’ll need to prepare to meet challenging FCA questions in this area.
Unlike TCF, a ‘one size fits all’ approach will not cut it; firms will need to have the capabilities to identify where tailored services are required. We’ll be looking at how firms can implement a robust outcomes monitoring framework and reporting mechanisms to enable visibility of outcomes throughout the end-to-end customer journey.
We’ll be discussing the theme of proportionality under Consumer Duty – looking at key areas such as Customer Understanding – and how firms can implement strategies to validate outcomes and satisfy compliance expectations.
With the onus now on firms to prove to the FCA that they are delivering good customer outcomes and providing tangible evidence of what actions they are taking where outcomes are poor, our panel will be looking at the key questions that firms will need to be able to confidently answer in readiness for the annual attestation and beyond.
For most firms, getting to 31 July 2023 was the culmination of months of hard work. Now, as firms look to transition the project into BAU, it is critical that firms think about how they are going to be able to demonstrate they are truly acting in the spirit of the regulation.
Adrian Harvey, CEO at Elephants Don’t Forget, commented:
“Firms cannot relax into thinking that the job is done – they have to maintain momentum and continue to build on their work to date. The FCA has recently reiterated that the work to embed Consumer Duty has only just begun and that a great deal more work is still required to demonstrate a clear move away from tick-box approaches to compliance and genuinely embed the regulatory change into culture. We all know that Consumer Duty is a significant shift in regulatory expectations – requiring firms to do much more than enhance their policies, processes and MI dashboards – this is about truly embedding the behaviours and culture sought by the regulator.
The FCA’s ten key questions for firms to answer provides us with a fairly certain barometer of where the regulator’s focus is going to be over the next 12 months, so this session is looking at how we can align to these questions and offer practical insights on what firms need to do to be able to confidently answer them.”
Recent pressure exercised by the FCA over a firm's approach to fair value demonstrates the regulator's intent to hold a firm's Boards and Senior Executives accountable for monitoring whether its customers are receiving good outcomes.
Square 4's Principal Consultant, Tracy Auchterlonie, commented:
“In the early days of Consumer Duty consultation, there was a belief amongst some firms that if your customers were being treated fairly and your firm was compliant with Principle 6 and the six Treating Customers Fairly (TCF) outcomes, then the journey to meet Consumer Duty would be a short one, or even non-existent. Let’s be clear – compliance with TCF is not compliance with Consumer Duty. Being compliant with Principle 6 and the six TCF outcomes is not enough under the Consumer Duty. Firms need to ensure that they have made the cultural shift from measuring policy adherence to monitoring customer outcomes, benchmarking the results against what ‘good’ looks like."
The purpose of the Consumer Duty is less about how well your policies and frameworks are designed, but more about whether they are delivering good customer outcomes. Unlike TCF, which was mostly reactive and focused on ‘input’, the Duty requires firms to be proactive and focus on ‘output’. You’ve got to put yourselves in the customer’s shoes and walk through their end-to-end journey.
Square 4's Senior Consultant, Natalie Baglin, explained:
"When we pass our driving test, most driving instructors commonly say: “Well done! Now go and learn to drive." They know that they have taught us to pass the test, but we will learn a great deal more out on the open road. The same can be said of Consumer Duty. You’ve worked hard to review and enhance your products, services, pricing and communications for the 31 July deadline – you’ve passed the test! But now you need to go out and learn about the outcomes your customers are actually experiencing.
This is a constantly evolving state where you need to check, amend, and check again. The FCA nor the industry cannot afford for this regime to miss another mis-selling scandal so the FCA will be eager to make sure that firms have used the implementation period well and have everything in place to identify foreseeable harm and evidence the outcomes that its customers are receiving.”