Key Takeaways from FCA Speech & Good/Bad Practice Report

In a recent speech at KPMG, Sheldon Mills, the FCA Executive Director, Consumers and Competition, acknowledged the progress made by firms in implementing the Consumer Duty since its introduction in July 2023, but stressed the need for further improvement.

The speech and the FCA’s recently published report on good and bad practice highlight challenges and areas needing improvement for firms implementing the Consumer Duty. Here are the key points:

Fair Price and Value

Mills highlighted the challenge of ensuring fair price and value for consumers. Firms are urged to objectively assess product value and avoid basing prices solely on market benchmarks.

Importance of Data

Effective use of data is crucial for assessing fair price, value, and customer outcomes. Firms should develop both quantitative and qualitative metrics to better understand the diverse needs of customers and improve outcomes.

Management Information (MI), used to run the business, should be relevant to the Consumer Duty. Firms should consider their use of data before board reports are due in July, as these will face scrutiny as they will be considered evidence of the steps firms are taking to drive good consumer outcomes.

Culture and Governance

Implementing the Duty requires embedding a consumer-centric culture across all levels of firms. Leadership should prioritise customer perspectives and take action based on data insights.

Vulnerable Customers

Firms must track and address the needs of vulnerable customers across products. They should review approaches to vulnerability and ensure sensitive handling of interactions.

Customer Understanding and Support

Firms should simplify communications and improve staff training to support better customer outcomes, especially for those in financial difficulty.

Product Design and Distribution

Collaboration within the distribution chain is key for effective product design and distribution. Manufacturers and distributors should share information to achieve good customer outcomes.

Sustainable Business Models

Implementing the Duty can lead to higher standards, healthier competition, and increased trust in the sector, benefiting both consumers and the financial services industry.

Preparing for Board Assessment

Firms should prepare draft reports for earlier board meetings to ensure alignment with FCA expectations by the July deadline.

Closed Products Compliance

Firms must ensure compliance for closed products by the end of July, addressing challenges such as evidencing good outcomes, determining fair value, and supporting customers.

For assistance in compliance and implementation, firms can get in touch with UKGI for guidance on operational and cultural aspects of the Consumer Duty.

Get in touch for further support

For assistance in compliance and implementation, firms can get in touch with UKGI at info@ukgigroup.com. Our consultants can provide guidance and advice on embedding the Consumer Duty both culturally and operationally in firms, and how to evidence this to the regulator.

Or, if you would like to increase your workforce's awareness and understanding of the Consumer Duty and how it applies, the Development Zone offers a range of courses to grow and develop learner's knowledge and skills, whilst helping to complete and record CPD in line with regulatory requirements. Relevant courses include:

• Consumer Duty - An Introduction
• Consumer Duty: The Four Outcomes
• Consumer Duty: The Consumer Principle Explained
• Consumer Harm: Identification, Prevention, and the Consumer Duty
• Consumer Barriers within the Financial Services
• Customer Service: The Channels of Communication
• Supporting Consumers: Processes in the Product and Service Lifecycle
• Vulnerability: Identifying, Understanding and Supporting Vulnerable Customers in Financial Services

Get in touch at devzone@ukgigroup.com to find out more, or to book a 14-day free trial.