Consumer Duty Assessment & Monitoring

“Assessing the compliance of firms with Consumer Duty obligations.”

Consumer Duty assessment and monitoring has been a key focus for the FCA since it came into force last year. The regulator has been completing monitoring waves across a range of sectors to assess compliance with the Consumer Duty rules. The second wave of monitoring sampled 634 FCA regulated firms. Most were small-medium businesses from 6 sectors. The sectors included retail finance, insurance intermediaries, credit brokers and wealth management firms.

Questions included in the monitoring of Consumer Duty processes included: –

Do you have a named person/team responsible for ensuring you meet the requirements of the Duty?
Have you conducted a fair value assessment of your existing products and services?
Have you assessed the end to end consumer journey?
Have you identified the target market for each of your products and services?
Have you assessed the needs of consumers with characteristics of vulnerability?

The assessments carried out by the FCA so far have found numerous improvements that need to be made. These are not sector specific and apply to several different business types and sizes.

The regulator have asked firms to look at the outcomes of ongoing assessments and to put processes into place. The PRIN 2A rules apply to closed products and services from 31st July 2024. The FCA have suggested this date for firms to make the required improvements for existing open products and services.

Consumer Duty Failures and Improvements

Visit the FCA Consumer Duty page to see a full publication of the review assessments, outcomes and improvement suggestions. We have noted just a few of the FCA’s findings and suggestions below.

“Consumer duty programme reviews and outcomes not always discussed at Board level. Firms need to ensure that the focus on good customer outcomes is understood at all levels. This includes in a firms’ strategies, leadership, and people policies.”
“Better data and monitoring strategies are required. Firms should not be complacent and assume that they can just repackage existing data. Firms must think seriously about what information they need to really” understand their customers’ outcomes and issues they may be facing.
“Failures in identifying weaknesses in processes for tracking vulnerable customers. Firms should be able to identify where particular groups of customers, especially those that are vulnerable, receive poorer outcomes than other customers and take action to address this.”

Consumer Duty Policies & Templates

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