‘Firms will need to use judgement’, said the regulator, dependent on the scale, and complexity of the business, and the products and customers it serves to make sure it is delivering good outcomes.
Regulator the Financial Conduct Authority said: “One question firms can therefore ask themselves is whether they are using the same MI capabilities they use to inform other elements of their business, such as product development or sales, to also monitor outcomes.”
It added: “We expect firms to continually review and develop their frameworks.”
The FCA listed the types of information firms may want to harness to embed Consumer Duty within the business.
Business persistence data, or why customers don’t return or high turnover could flag poor treatment, it said.
Firms could also assess the kinds of customers that buy certain types of products, incur particular fees and charges or get worse outcomes compared to other consumers. Training and competency records, with analysis of staff training including remedial action if staff performance is poor, is also on the list.
It said file reviews, collecting informal and formal customer feedback and complaints data would also be useful, alongside complaints root cause analysis where situations are fully investigated, not just data dealing with the ‘symptoms’ of a problem. The regulator also suggested feedback from other parties in the distribution chain would be useful to understand any issues with how problems are sold and whether sales matched the target market, alongside researching or testing customer experience through mystery shopping, for example.
Allowing staff to feed back honestly when they think products or services, or how the processes used to deliver them could be improved was another route.
Additionally, the regulator said detecting and paying particular attention to vulnerable customers remains critical.
Firms should support their staff to identify signs of vulnerability, for instance through training and resources, and set up systems and processes that enable customers to disclose their needs if they choose to.
“This should enable firms to capture information about customer needs, such as communication needs or information about customers’ characteristics of vulnerability. It is highly unlikely that firms will be able to meet the needs of all of their customers if they are not capturing such information,” it said.
The implementation timetable is 12 months, so the end of July 2023 for all new and existing products and services on sale or open for renewal. The deadline is July 2024, or 24 months for all closed products and services.
For the two Consumer Duty papers out today, see:
A new Consumer Duty. Feedback to CP21/36 and final rules
Finalised Guidance FG22/5 Final non-Handbook Guidance for Firms on the Consumer Duty
