If a firm is a “clear outlier” in the way it is operating, it may receive a visit from the regulator, according to Therese Chambers, joint executive director of enforcement and market oversight at the FCA.
Speaking as part of a panel discussion at the FCA on the anniversary of the consumer duty, Chambers discussed whether the regulator has taken enforcement action against firms in relation to the duty.
She said: “As an organisation, we've been clear from the outset that we're going to take a proportionate approach across the board, recognising that this is a very significant shift for firms to adapt to in meeting these new higher standards.
“And so we've been engaging with firms and have been really collaborative, trying to educate, trying to discuss, trying to illuminate. So our first step in this program of work has absolutely not been to reach for the big stick.”
However, Chambers highlighted one of the things that made her “ears twitch” and would cause the FCA to look at a firm was if they were a “clear outlier” in the way they were operating.
“Being an outlier isn't necessarily a bad thing, but it will be important to understand the reasons why that firm is an outlier, and I hope there will be a good explanation for that.
“If in fact, there wasn't a fantastic reason for that gap between a firm and its peers, we would expect a firm to be responding in a positive and constructive way to the feedback that we give.
“So basically, what I'm saying is, if we see a problem, we'll call it out, we'll ask you to fix it. If you don't fix it, I might be knocking on your door,” she added.
Challenges for firms
Chambers was also joined by Graeme Reynolds, director of competition and Dominic Cashman, director of authorisations at the FCA, as well as Abby Thomas, chief executive at the Fos.
Reynolds highlighted there were two “stand out” things that firms have struggled with when implementing the duty.
“The first is fair value assessment, so that won't surprise you, the price and value outcome has been challenging for a number of firms to think about and get their heads around. And then secondly, outcomes monitoring,” he explained.
Reynolds said the FCA has been seeking to work with firms over the past year to make sure that it is tackling some of the questions that firms are asking and helping them move into thinking about different ways of putting in place the fair value assessments they need.
He also confirmed the FCA would be putting out good and bad practice in relation to fair value assessments that it has seen from those firms it has looked at so far.
Reynolds drew out five key areas the FCA thought were “key ingredients” for a good fair value assessment.
These included good benchmarking, solid data and credible evidence and clear consideration of customer cohorts based on the target market.
