Speaking at a webinar on Consumer Duty, Geale said: “The job clearly is not finished and… actually, the closed book deadline will, for some firms, be even more of a challenge than the original one in July this year.”
He gave the example of mortgages and savings products, saying some deals were longstanding and there were areas of “significant instances of customer inertia” where people were sitting in legacy accounts for years without changing “when they could be achieving better value”.
Because of Consumer Duty, Geale said there was evidence of a culture shift within some firms but at others, there could be “more attention at ExCo and board level” as they thought “it was all done”.
There was evidence of weaknesses around identifying and supporting vulnerable customers, Geale said, due to an inability to track them, support channels, data gaps and gaps in the services offered.
“That needs to be a really key consideration for firms going forward,” Geale said.
He said a lot of good work had been done and there had been positive changes, “but, the key message is don’t stop now. This work will never be done, as such”.
Not a once and done exercise
Nisha Arora, director of cross cutting policy and strategy at the FCA, said this was the start of the journey of Consumer Duty.
She added: “As I recently said in a speech, the Consumer Duty is not a ‘once and done’ exercise. It is an ongoing commitment to putting your consumers’ needs and the outcomes they are receiving front and centre and really embedding this in your policies, your practices and your culture throughout the whole organisation.”
Arora said firms worked “really hard” to meet the first implementation deadline and the benefits to consumers were already evident.
Arora added: “It is an ongoing commitment to putting your consumers’ needs and the outcomes they are receiving front and centre and really embedding this in your policies, your practices and your culture throughout the whole organisation.”
She said the task to “embed Consumer Duty is an ongoing one” and firms needed to focus on the closed products and annual board report in the coming months.
She said firms should make sure they were on track to meet the closed products deadline of 31 July, to identify the greatest areas of harm and the biggest gaps.
With the annual board reports, Arora said a company’s board or equivalent governing body needed to review and approve an assessment of whether good outcomes were being delivered.
She added: “This is not an attestation to us, it is a piece of internal governance. It is a really important one.”
The FCA will look at a sample of reports and provide feedback on good practice across the industry with this, Arora added.
Identifying concerns
Arora said where the FCA was concerned about a firm’s practice, it would have a supervisory conversation so changes could be made without the use of the regulator’s formal powers.
In more serious cases, it will use formal tools such as asking firms to stop certain activities, imposing fines or public censure.
The regulator will also look at problems across sectors and may undertake multi-firm work, as well as assess cross-sector practices to spot any issues such as complaints handling.
