Culture, governance and accountability

The Consumer Duty requires firms to ensure that acting to deliver good outcomes is reflected in their strategies, governance, leadership and people policies. Customer outcomes should be a central focus of their risk and internal audit processes. Firms must also ensure that their staff incentives, performance management frameworks and remuneration structures are designed in a way that is consistent with ensuring good outcomes for customers.[1]

Key questions firms could ask themselves to ensure that they are compliant with this requirement include:

1. Does the firm’s purpose (whether publicly articulated or not) align with its obligations under the Consumer Duty? How is it embedded and understood throughout the organisation?
2. How does the organisation’s culture support the delivery of good outcomes for customers?
3. How does the organisation ensure that individuals throughout the organisation – including those in control and support functions – understand their role in delivering the Consumer Duty?
4. Are staff empowered and feel safe to challenge and raise issues where they feel the firm might not be acting to deliver good outcomes for customers? Are those challenges listened to, and where necessary, acted on?
5. Is the Consumer Duty being considered in all relevant discussions such as strategy and remuneration? Are customers outcomes a key lens for Risk and Internal Audit?
6. How is the firm ensuring that its remuneration and incentive structures drive good outcomes for customers?

Next time

Next time, in our final article, we’ll be turning our attention to look at the relationship between the Consumer Duty and the Senior Managers & Certification Regime (the “SM&CR”), so stay tuned!

[1] FG22/5, 10.7