FCA feedback on Consumer Duty MI.

YOUR COMPLIANCE MATTERS: FCA feedback on Consumer Duty MI.

Relevance:     All firms.

Action required:       Review your own Management information and position against FCA feedback.

The FCA has been communicating with firms throughout the lead up to Consumer Duty implementation in July 2023, and since then via a number of research and feedback papers. The FCA has published feedback specifically looking at ‘Outcomes monitoring’ - the MI you use to identify whether you are delivering ‘Good outcomes’ to your clients. Feedback was published in June 2024 see:

https://www.fca.org.uk/publications/multi-firm-reviews/insurance-multi-firm-review-outcomes-monitoring-under-consumer-duty/printable/print

The research completed by the FCA was based on Consumer Duty Board reports supplied by 20 ‘larger’ firms back in December 2023 (so maybe a little early in the process). Firms involved included general and life insurers. intermediaries and outsourcers.

The purpose of the review was to identify any general themes emerging and evidence of good practice and areas for improvement. The FCA has always been clear that firms need to take a proportionate approach to its MI (so for a smaller firm, the MI and oversight will be simpler) so their expectations for this group of firms were relatively high.

Good practice

●                Clear mapping of metrics to the four outcomes (Consumer understanding, Consumer Support, Price and Value, Products and Services)

●                Identification of potential types of poor outcomes and their significance

●                Identification of relevant MI (even if not yet available)

●                Proactively identifying foreseeable harm

●                Monitoring compliance with SLAs where activity is outsourced

●                Utilising customer feedback, including online ratings

●                Using internal audit results to identify issues

●                Full root cause analysis of complaints

●                Testing the customer journey to identify issues

●                Clear focus on vulnerability

●                Clear action and follow up when issues have been identified

Could do better

●                Too much focus on internal process (a tick in a box to say that communications have been reviewed does not automatically lead to better outcomes)

●                Not enough data (not knowing what was needed, repackaging existing MI without considering whether it really provides the MI needed).

●                Limited focus on claims outcomes (e.g. considering speed of resolution without considering whether the customer got the right outcome)

●                The governing body of the business was too often receiving data with no analysis, interpretation or recommended action.

●                Lack of trend analysis

●                Setting the bar for acceptable outcomes too low (and reducing expectations to match outcomes)

●                No consideration of vulnerability

●                Lack of action when issues are identified

Action required

Firms are expected to review their monitoring of Consumer outcomes and consider whether their approach is sufficiently broad to ensure that the firm is focused on the information needed to identify its ability to deliver good outcomes.

As always, please get in touch if there are any issues that you would like to discuss.