"It's Showtime" for Boards and Consumer Duty Reporting!

While 2023 saw the majority of the heavy lifting for firms on their Consumer Duty compliance implementation, 2024 will see Boards and Governing Bodies being required to review and approve their firm’s report on the outcomes being received by their retail customers.

As a reminder, Boards and Governing bodies are required to confirm, at least annually, whether they are satisfied that the firm is complying with its obligations under Consumer Duty, and to make an assessment on whether the firm’s forward looking business strategy is consistent with its Consumer Duty obligations. The newly appointed Board level Consumer Duty Champions will I’m sure be reminding the senior executives of this impending deadline!

Feedback I have seen from firms and related forums within the Wealth & Asset Management sectors of the UK’s financial services industry, is that most firms are planning their Board approvals over the next few months, ahead of the 31 July 2024, the 12-month anniversary of the main Consumer Duty implementation deadline. The clock is ticking!

The FCA requires the firm’s annual report on Consumer Duty to provide a holistic, comprehensive and evidence-based assessment on the firm's delivery of good customer outcomes across the financial products and services they manufacture and/or distribute. This as needs to detail:

• Any actions required to address any risks they have identified that customers might not receive good outcomes;
• Any actions required to address any instances where customers have not received good outcomes; and
• Amendments required to the firm’s business strategy to ensure it remains consistent with meeting the firm’s obligations under Consumer Duty.

Creating this report will rely heavily on the firm’s implementation of their Monitoring solutions during 2023, covering their monitoring of the actual outcomes customers are experiencing.

The FCA requires firms to take a holistic view on monitoring and bringing all this information and data into one place such as in a Consumer Duty Dashboard is likely to be a positive move, providing focus as well as enabling new insights from joining the dots across different measures and areas of the business.

Firms that are already operating within the rules and guidelines in the FCA Handbook will already have access to wealth of data that will be used in the report, such as data on complaints, adherence to SLAs etc, though much of this is reactive.

Consumer Duty has added new requirements for firms to deliver Target Market statements and Value for Money assessments to their customers and undertaking Product Reviews and Product Testing will provide further data points for the report.

Product Reviews and Product Testing in particular will help firm’s establish whether their products are meeting the needs identified for customers in the Target Market and whether the products are being distributed correctly or are in fact reaching customers outside of the Target Market (e.g. products requiring Advice being distributed to direct retail customers, products for UK only customers being distributed to foreign nationals etc). All valuable data points to support the identification of actions firms may need to take.

Firms should also be taking proactive measures to ensure they are delivering good customer outcomes including in their product governance processes and customer communications. ?

Data points from reviews and testing of customer communications will help evidence the firm’s commitment to deliver on the Customer Understanding and Customer Support outcomes. These reviews should cover all manner of correspondence and documents the firm provides to customers (product information, promotions, T&Cs, letters, statements, emails, instant messages, call scripts etc) as well as content provided on web journeys.

Having a central technology solution that facilitates customer communication reviews will help simplify the firm’s processes here and aid quantitative reporting up to their Governance Bodies and Boards. An effective review process, coupled with an uprated set of communication standards that reflect Consumer Duty, the provision of training and enabled staff should put firms in a solid position here. Add in feedback from customers on specific communications (either directly or via partnering with a provider) and firms will truly be demonstrating their commitment (provided of course that reasonable and timely actions are taken on the feedback gained!).? Clearly priorities for what to review and when will need to be agreed as in my experience, once you shine a torch on this, you’ll find the firm has many more customer communications than you ever expected!

Channelling all of these potential data points into something from which valuable insights can be derived for governance bodies at various levels within the firm is part of the challenge, making a Consumer Duty Dashboard a repeatable process is another! This deserves an article or two on its own!

I’ve just scratched the surface on this one here, far too much for one article! Having led a large multi-business Consumer Duty programme, I do have some insights on the topic and I’m always happy to share. Please do reach out. If you need some help or guidance!

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