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Have you eaten the biggest frog? – Consumer Duty Implementation

Nadege Genetay


The importance of the Consumer Duty initiative to the FCA is in no doubt. Communication by the regulator around Consumer Duty Implementation has been particularly intensive – multiple webinars, a multi-firm review on around 60 firms’ implementation plans, survey of 600 firms, sector specific Dear CEO letters on the implementation of the duty, a podcast and multiple speeches. The message has been uniquely consistent: this should be a top priority for senior management. The emphasis on senior management is not surprising: the Duty asks firms to think for themselves what are good outcomes for customers in the context of their specific business model; this is not about compliance with specific rules, but very much about strategy, business model, and culture.

With four months to go until the end of the Consumer Duty implementation period, this is a good point for firms to do a stocktake on where they are.

We suggest firms ask themselves four key questions:

  1. Have we finished the review phase of the plan?
  2. Are we clear on where we want to be by the end of July, and what deliverables and continuous improvements happen after that?
  3. Do we have a clear plan about the information to share with  our distributors and partners?
  4. Have we eaten the biggest frog?

This last point is a reference to the recent FCA speech by Sheldon Mills (borrowing from Mark Twain).

1.Have we finished the review phase of the plan?

Firms should have undertaken a gap analysis and prioritisation exercise to review products, customer communications and customer journeys. This should have led to recommendations for changes, including changes to existing policies, procedures and Management Information (MI), alongside potential changes to products or their distribution, communications, and support. By now, firms really want this phase to be finished and be in a phase of implementation of agreed changes.

2. Are we clear on where we want to be by end July, and what deliverables and continuous improvements happen after that?

You should be clear on the changes that will be delivered by 31 July. This is likely to include building up the internal framework to implement the consumer duty (policies, procedures and MI), internal communication and training for staff, alongside the immediate changes identified following the prioritised reviews of products, communications and support. These should demonstrate substantive compliance with the consumer duty obligations, not a cut and dry statement of full compliance.

The delivery of the consumer duty obligations is not one point in time but a process of continuous improvement. Firms should have a programme that stretches beyond the initial prioritisation exercise and uses new insights to deliver on consumer duty obligations. Some actions may require longer to implement (especially those involving significant systems changes) and these may need to be flagged as part of the attestation of compliance in July.

3. Do we have a clear plan about the information to share with our distributors and partners?

For firms in the insurance sector, information on products and services should have been shared with relevant intermediaries in advance of the deadline of October 2022 to enable them to make their own product and fair value assessment. If firms have identified changes they need to make to their products following additional reviews, they should ensure that they share the relevant information in good time for intermediaries to make any necessary changes to their distribution strategy or pricing. In other sectors, firms should ensure that they have shared sufficient information by the end of April to enable distributors to understand the key characteristics and value of the products.

If the firm’s review of communications or customer journeys identified poor outcomes and changes are being made as a result, the firm should consider the impact of changes on distributors and partners, in particular if it requires them to make significant changes of their own, and the firm should communicate with the impacted third parties by the end of April.
Even if there are no significant operational impacts on third-parties, firms should consider whether they should more broadly communicate about the heightened expectations of the consumer duty and the changes they are making as a result. And whether any change should be made to terms of business agreements.

Firms should also make sure that they have considered other third parties to whom they have outsourced customer-related functions, and in particular if they want them to make any changes or require additional management information.

4. Have we eaten the biggest frog?

This is a good time for senior management to step back from the plan activities, and consider the focus of activities and changes towards the end of the Consumer Duty implementation. Are these right? Or has the firm’s plan delivered on the ‘easier’ asks – and not well-known areas of poor outcomes which are in the ‘too difficult’ box? Ultimately, firms’ senior management will have to confirm to their board and potentially the regulator that they are complying with the consumer duty. This is unlikely to be credible if the firm has made no changes to products who measure badly in the FCA’s value measures data, or done nothing about significant communications and support mechanisms that generate a significant number of complaints.

In short, a lot should be happening in your firm to confirm substantive compliance with the consumer duty by the end of July – if not, you should urgently reach out for advice as you are unlikely to meet the regulator’s expectations. Now is a good time to step back, and reflect on where you are in your plan, and what your narrative will be to your board and regulator about what you will have achieved by July, and, in particular, whether you have tackled potentially big issues.