Reporting for (consumer) duty
As previously mentioned, July 31 marks not one but two significant consumer duty deadlines, with the first annual report due to be submitted by this date.
With these reports, the FCA is asking companies to demonstrate their framework that evaluates their ability to provide good customer outcomes and identify instances where expectations are not being met, and the action taken accordingly.
Culture and communication
By this date, the regulator will expect that all companies have, in their reports, demonstrated an understanding of the overarching principles of the consumer duty and shown extensive evidence of how they are meeting best practices.
However, to have reached this point, the groundwork will have needed to be laid some time ago, with a culture of accountability embedded from the board downwards.
Companies may have installed an internal “facilitator” of the consumer duty who reports to the consumer duty champion and supports the chair and chief executive to ensure the necessary conversations around the duty are being regularly raised, a record made of discussion, and challenges brought where inaction is evident.
Businesses may also have demonstrated their ongoing commitment to employee training on the duty.
Companies will have 12 months of real life case studies to draw on to bring to life the outcomes expected and the link to how employees’ action and behaviour affects consumer outcomes.
Taken together, this will ensure effective, two-way communication between individual business lines — responsible for implementing consumer duty requirements — and the senior leadership team.
The FCA expects that the board takes full responsibility for ensuring that the duty is properly embedded within the company, and this includes senior managers being accountable for the outcomes their customers are experiencing, in line with their accountability under the Senior Managers and Certification Regime.
To support the first annual report and as an example of good practice, companies should be able to demonstrate their regular meetings between the chief executive, the consumer duty facilitator, and the consumer duty champion, which reviewed and challenged ongoing actions, enhancements, monitoring metrics and regulatory developments.
Data, data, data
While a culture of accountability and effective communication will help companies take a holistic approach to their first consumer duty report, the content itself will be determined by the quality of the data that is used to measure progress against the four outcomes focused around products and services, price and value, consumer understanding, and consumer support.
The FCA has emphasised the importance of using quantitative and qualitative data to showcase progress, encouraging companies to undertake customer focus groups, and include case studies within their report to demonstrate the delivery of good outcomes.
