Consumer Duty Summary: What can be made of the FCA's Consumer Duty Regulation PS22/9?
22 Mar 2023
Consumer Duty Summary
The FCA’s Consumer Duty policy statement (PS22/9) lays out clear standards for advisory firms platforms and providers to provide greater care for consumers of FCA-regulated products and services.
The regulation focuses on improving consumer outcomes in four key areas: consumer understanding, products and services, consumer support and value for money. From 31st July 2023, the Consumer Duty implementation date, the FCA can seek evidence of efforts to improve outcomes for your customers in each of these areas. From 31st July 2024, these new consumer duty requirements must be extended to legacy ‘closed book’ product portfolios, arguably an even larger task for providers with closed books of business and many unengaged orphan clients.
Furthermore, the FCA expects firms to have a Consumer Duty champion at board level to supervise the delivery of positive consumer duty outcomes.
FinTech Opportunities
The new Consumer Duty regulation will give firms an opportunity to use available data to innovate to drive positive consumer outcomes. The FCA will consider if senior leaders are using all the data and information available to them to ensure that they are delivering these outcomes as effectively as possible.
The FCA is keen to promote a vast culture shift, not just focused on ensuring compliance with Consumer Duty regulation. Knowing and understanding your policyholders, their needs and how the products and services you are offering meets these needs is key. The FCA also expects providers to investigate other parts of the value chain to ensure that they too are working towards better consumer outcomes.
Which types of Consumer Duty data should be gathered?
Platforms and providers now have access to extensive and all-encompassing data, providing insight into customer behaviour far beyond what was previously available. In practice, firms can use this data to inform product development - demonstrating the importance of a strong data strategy.
To determine what kind of data to gather, firms must understand that the goal is to demonstrate that the consumer is at the heart of what they are doing.
Firms can start with their own consumer data to demonstrate outcomes. The data should reflect customer behaviours and answer questions like:
- Who are your customers?
- What are their financial needs and how are you meeting their needs?
- How are they interacting with you?
- What kind of support are they getting and when?
- Are they vulnerable and if so how are your vulnerable customers being supported?
The answers to these questions can help to build a picture, from which a truly data-aligned product development strategy can emerge.
Dunstan Thomas discuss this further in the ‘Consumer Duty: A Recipe For Change’ whitepaper. Access the whitepaper here.
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