By Jess Rushton, Head of Business Development
A year is a short time in financial services. In July 2022, the FCA published their final rules and guidance around the four Consumer Duty outcomes. Just 12 months later, the new legislation applied to all new products and services, and all existing products and services remaining on sale or open for renewal. So from 31 July 2023, all companies must prove their compliance with the new legislation.
Since the July deadline passed, we've attended two Consumer Duty seminars in Manchester and London. Here's our takeaways from the sessions:
Consumer Duty is here to stay
Both were very well attended, a reflection of the interest (or fear?) in the new Consumer Duty. The attendees were clearly keen to gauge the general sentiment towards the legislation from across the industry, and share insights around meeting the Consumer Duty outcomes.
There was a widespread acceptance that the new legislation is here to stay. After all, the FCA is already starting to take action. On the very same day of the July deadline, the regulator set out a 14-point plan to ensure banks and building societies were passing interest rate rises to savers appropriately, and offering better savings deals (1). Clearly, the FCA won’t be afraid to take strong action if necessary.
Great things are happening
But on a positive note, the seminars reminded us of all the great things happening in the industry. For example, in Manchester we were told that recent FCA research showed there were high levels of satisfaction with mortgage brokers, and most adults who’d used a mortgage broker trusted them. This doesn’t paint the picture of an industry that doesn’t want to do the right thing by its customers. Despite this, there still remains a sense of unnerve towards Consumer Duty across financial services.
But apprehension remains
From the conversations at the sessions, the main concern seems to be around the evidencing requirements. While the FCA has provided significant guidance in this area, they haven’t provided hard and fast rules about what a company must or must not do to guarantee compliance. Like most FCA regulation, companies have been left to interpret the Consumer Duty guidance to the best of their ability. So even though we’ve seen many examples of significant undertakings across the industry, such as lengthy implementation plans and taskforces, it’s no surprise that a sense of apprehension still remains for some.
It doesn’t need to be complicated
However, the sessions reminded us that Consumer Duty isn’t out to trip anybody up. As we heard in London, the key thing the regulator will want to know is: ‘How can you prove your delivering good customer outcomes?’.
So when called upon, companies need to be able to show the regulator they’re doing this. For the vast majority, this shouldn’t result in wholesale changes to processes. After all, most will genuinely want to do right things by their customers, particularly in such a regulated industry. Consumer Duty just means proving it.
If you need any help with your Consumer Duty reporting requirements, Smart Money People can help using our customer review insight data. Head to our dedicated Consumer Duty page for more information.