The FCA’s latest deep dive into firms’ Consumer Duty journeys, published on 20th February, has shed new light on the need for businesses to review and where necessary ‘level up’ their oversight and monitoring strategy for long-term compliance to ensure the right customer outcomes and deliver on associated responsibilities - including systems and controls and discharging SMCR duties.
The regulator has urged regulated businesses to continue paying attention to all aspects of the Consumer Duty, whilst noting several critical points that firms need to focus on as the Consumer Duty rollout continues.
The areas highlighted included familiar challenges like demonstrating fair value and maintaining effective customer communications and firms should note the emphasis given to firms’ data and increased need for evidencing processes in response to the new ‘show me, don’t tell me’ supervision framework – this could be perceived as the regulator now calling firms’ “bluff”, warning they ‘should not be complacent and assume that they can just repackage existing data’.
It’s clear, then, that the FCA is expecting senior managers to embrace an evidence-based approach to decision making, backed up by hard data and meaningful insights that paint a clear picture of their customer lifecycle.
And with the first Consumer Duty annual assessment deadline fast approaching (July 2024), now’s the time for Boards to be examining in real detail what kind of new data and MI they’ll need to achieve this type of customer-centric governance.
But what does that mean and how do firms deliver on FCA expectations?
A new kind of supervision requires new data, says FCA
The Consumer Duty’s increased oversight requirements put the onus on senior leaders and board members to monitor whether good outcomes are truly being delivered for customers. And where they’re falling short, they’ll be expected to take action to rectify inefficiencies or blindspots – as well as embrace MI to learn from past mistakes.
Speaking at an event organised by KPMG on 20th February, the FCA’s Executive Director, Consumers and Competition, Sheldon Mills, explained:
“A key part of the Duty is that firms are able to evidence the outcomes their customers are receiving, whether that relates to life insurance, mortgages, cash savings, funeral plans or any other open or closed product.”
In the same speech, Mills also mentioned the importance of being proactive in addressing any risks that could come from absent data or incomplete records:
“Where a firm can’t fill gaps in its records, it should take additional steps to mitigate the risk of harm to consumers – for example through enhanced outcomes testing for these customers.”
To address this problem, the FCA has previously called on firms to be bold and embrace new technologies to help them gather the right data to empower customers to meet their financial goals.
As Gary Maude, Director of Advisory Practice at our sister company, compliance consultancy TCC Group, points out:
“The real challenge we’re seeing firms encounter is maintaining visibility across their customer journey – right from ensuring their products and services are developed effectively from manufacture into distribution, and in after-sales care through review of ‘meaningful’ and ‘proportionate’ performance KPI and KRIs, which seek to understand performance versus expectation; not only of commercial performance but of customer fairness and value.
“It’s becoming clear that the old ways of doing things – like relying on customer feedback and opinion surveys – simply aren’t offering the depth of information the Consumer Duty needs. And that’s why firms are increasingly turning to technology to show them what manual methods can’t.”
It’s becoming clear that the old ways of doing things simply aren’t offering the depth of information the Consumer Duty needs. And that’s why firms are increasingly turning to technology to show them what manual methods can’t.
Discover complete oversight of your client-adviser conversations
Where firms use advisers and/or call centres It’s no secret that both Consumer Duty rules and the FCA handbook call on firms to maintain regular, robust oversight of the communications and support it provides to its customers – defining success by their ability to determine:
- Whether retail customers are being, or have been, sold products that have been designed to meet their needs, characteristics and objectives;
- Whether the products that retail customers purchase provide fair value and appropriate action has been taken to address products identified as not providing fair value;
- Whether retail customers are equipped with the right information to make effective, timely and properly informed decisions;
- Whether retail customers receive the support they need to deliver service; and
- Where customers require specific support e.g. vulnerable.
Level up your compliance with technology
Gathering the necessary information to satisfy the Consumer Duty requirements might seem like a daunting task, especially for larger firms who often hold hundreds of hours’ worth of interactions per month.
That’s where Recordsure’s revolutionary technology comes into play. Working with TCC’s regulatory experts, Recordsure’s tech solutions were specifically created to address the challenges of regulated businesses.
We help firms create reliable, efficient evidencing and audit trails, deliver unprecedented oversight and transparency, and – with the use of proprietary AI – drive effective process reviews without increasing costs.
Oversight and analyses
Our Recordsure Capture app is designed to create a reliable audio record of client conversations for evidence and analysis, which is especially valuable for in-person and online conversations whatever the environment.
This allows for much higher volumes in Quality Assurance and responsive risk based reviews.
Recordsure ReviewAI – unique AI speech and document analytics tools – helps you transform your oversight strategy with smart automation, superior evidencing of outcomes and unrivalled efficiencies.
With 100% oversight and a more effective approach to conversation and document reviews, you can unlock deep MI insights that help you pinpoint and address risks as they arise.
