Consumer Duty: An Update

The Financial Conduct Authority (FCA) is really stepping up with the Consumer Duty – even more so than with other new regime implementations. Regular reviews of how individual firms and sectors are embedding the Duty started almost immediately. These aren’t just reports to skim over, they’re useful mines of information that tell us exactly what the FCA is looking for and how we can fine-tune our practice. This is why ongoing training isn’t just important – it bridges the gap between simply understanding the FCA’s findings and actively implementing those insights in day-to-day operations. 

A review published in February set out what firms are doing well and what they could do better.

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Regulatory Round Up: April 2024

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The Consumer Duty (2024)

Consumer Duty Compliance Resources

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The first outcome, under ‘culture, governance and monitoring’ wants to see good confidence in retail financial services markets, with healthy competition based on high standards and firms focused on delivering good customer outcomes. This needs to see firms acting in good faith towards customers, avoiding causing foreseeable harm, and supporting customers to pursue their financial objectives.

Good practice includes altering company purposes to signal to staff that their actions and behaviours should focus on customer outcomes and ensuring that responsibility for good customer outcomes is understood and owned across the business.

So how does this work in practice?

What is needed is to embed a culture where every staff member understands and owns the responsibility for these outcomes. Training plays a crucial role here. It needs to provide an essential foundation by helping staff understand what good customer outcomes are, how they link to the Duty, what they might look like in practice, and how to support customers towards these goals. This might include specific communication techniques for vulnerable customers, taking the time to understand products and services offered so they have a clear idea of how and when they might not be suitable for certain customers, and even deviating from the script where necessary and supported by the firm, to better understand customers’ financial circumstances.

The FCA are keen to impress the importance of regular reminders of the consumer outcomes. They understand that the higher standard is a natural progression from TCF and other work and initiatives designed to improve customer outcomes, but it is still a jump when you factor in all the work that needs to be done to get that higher standard reflected in practice.

The shift to a higher standard is more than a regulatory requirement; it’s about real change in how services are delivered. Training helps staff to recognise and understand why and how customers might have different circumstances and needs, thus ensuring they can offer support that’s both sensitive and effective, helping firms to meet those customer outcomes standards. Good quality training ensures that the commitment to high standards required by the Duty is more than just theoretical, it is a practical reality in every customer interaction. 

On all firms’ radars should be the current review of delivery of good outcomes for all customers, including those with characteristics of vulnerability. Started in March, the findings will be shared by the end of 2024. The review will look at firms’ understanding of consumer needs, communications and customer service, and the skills and capabilities of staff.

Getting staff up to speed with the background of the Duty, understanding good customer outcomes and how to support them and providing them with the range of skills they need to offer that support in practice – particularly to vulnerable customers – is a great starting point.

Our online training course, priced at just £20 a head, takes staff through the basics, explaining how the Duty works, what it expects and what it will mean for them.

Our popular range of Consumer Duty compliance resources – including webinars and downloadable content including product review templates – are available to browse and buy here: Consumer Duty Compliance Resources | RB Compliance Consultancy