FCA priorities under the Consumer Duty for the remainder of 2024/25.

The FCA has published (9th December) a document covering its Consumer Duty priorities for 2024/25. To quote from the document:

‘The Consumer Duty is one of the most significant changes to our regulatory approach in recent years. It has been in force for open products and services since 31 July 2023, and for closed products and services since 31 July 2024.

Priority areas for 2024/25

1. Embedding the Consumer Duty and raising standards

Assessing across sectors how firms are implementing and complying with the Consumer Duty

We want to understand how firms are improving consumer outcomes. Where we need more data and information from firms, we’ll only ask for what we need.

We have 3 cross-cutting projects which we are grouping into packages of publications in Q4 2024 and Q1 2025:

• Review of board/governing body reports and complaints and root cause analysis – Assessing how firms are responding to our outcomes monitoring requirements, for example through our review of Board reports and how firms are using insight from their complaints to identify systemic issues and improve business practices.’

Please see the FCA findings on board reports here https://www.fca.org.uk/publications/good-and-poor-practice/consumer-duty-board-reports-good-practice-and-areas-improvement

Findings on complaints handling here https://www.fca.org.uk/publications/good-and-poor-practice/complaints-and-root-cause-analysis-good-practice-and-areas-improvement

• ‘Review of treatment of customers in vulnerable circumstances – Assessing firms’ approach to the treatment of customers in vulnerable circumstances.
• Review of consumer support outcome and supporting informed decision-making – Looking at how firms support their customers across the customer journey and how they are using communications to support informed consumer decision-making.

Where we identify good practice, we will share it. Where there are areas for improvement, we will remind firms of our expectations and set out where they may need to accelerate progress. We will combine insights from our work where possible to make it easier for firms to understand what good and poor practice looks like. If we identify compliance issues, we will consider appropriate action.

We recognise different firms face different challenges. We want firms to take an approach that is proportionate to their size and to the activities they undertake. Where appropriate, we will set out different approaches smaller firms could take.

2. Enhancing understanding of the price and value outcome

We know firms have found challenges in conducting fair value assessments and have questions about our expectations. We want firms to use robust analysis to assure themselves, and us, that they are offering fair value, and identify and take action where they are not. In Q3 2024, we published reflections on fair value assessments we have reviewed.

Further priorities include Market study into premium finance – Reviewing whether people who borrow to pay for motor and home insurance are receiving fair, competitive deals. We plan to publish an interim report in H1 2025.

3. Sector-specific priorities

We have planned work to tackle areas of existing concern in sectors across the rest of this financial year and into the next. Firms should expect a general focus on their implementation and embedding of the Consumer Duty and customer outcomes as part of any supervisory engagement.

General and life insurance

We completed work looking at general and life insurance firms’ compliance with outcomes monitoring. We published our good and poor practice report in June 2024. We also completed our work looking at consumer support in the bereavement process and pension transfers. We published our findings in November 2024. Our focus is on the price and value outcome, following on from work on GAP insurance, and as shown through our market studies planned in pure protection and started in premium finance.

In addition, we will focus on:

• Claims handling arrangements – Understanding insurers’ claims handling arrangements and whether systems, controls, governance and oversight structures drive good consumer outcomes. We aim to publish findings in Q2 2025.

4. Realising the benefits of the Consumer Duty

With the Consumer Duty in force, we published a Call for Input covering our wider requirements on retail firms and asking where we can use the Duty to simplify them. The deadline for responses was 31 October 2024. We will set out next steps in H1 2025.’

Conclusion

There is nothing new here, and the areas of focus should not come as a surprise. The key point is that supervisory work will continue to focus on delivery of the Consumer Duty outcomes. So, firms need to stay focussed on this as an issue and ensure that management processes, and MI reviews, provide clear evidence of the firm’s focus on outcomes (and can demonstrate that action is taken where potentially poor outcomes are identified).