The new Consumer Duty has ushered an era marked by elevated standards, better transparency, and a renewed emphasis on trust. Previously, firms simply needed to demonstrate to the regulator that they had followed the regulatory signposts even if customers didn’t reach their intended destinations. Now, under the new Duty, it’s about ensuring all clients arrive at their intended destination. Any deviation implies a discrepancy along the journey.
The recent months of integrating the Duty have felt like scaling Mount Everest. The challenge is less about rigidly adhering to regulations, and more about crafting a sophisticated framework tailored for each individual business and their client base. To achieve this, firms delved into their operations, understanding both their current and potential customers' needs and preferences. However, the journey doesn’t end there and embedding the Consumer Duty is the next step that needs a continual and close eye:
People power: Resource allocation emerges as a prime consideration. Firms must be willing to invest, not just financially, but in terms of human capital. Continual and bespoke Consumer Duty training becomes paramount, ensuring personnel are equipped to uphold and advocate for the Consumer Duty.
Integrate governance: Effective governance is a cornerstone and must never be treated as an ancillary component. It must weave into daily operations, becoming the very fabric that guides firm decisions and actions. With third-party collaborations becoming the norm, this governance should also extend beyond firm boundaries. Also, a continual feedback loop is essential to react, adapt and refine measures to ensure they remain relevant and effective.
Technology touchpoints: As we navigate an era of digital transformation, technology influences numerous consumer decisions. Ensuring that these technological touchpoints, new or upgraded, are governed by the Consumer Duty's principles is non-negotiable. Additionally, as cybersecurity threats rise, it's vital to ensure that consumer data is protected and used ethically, reinforcing the trust that the Duty seeks to establish. Firms must be proactive in regularly reviewing and updating their tech platforms, ensuring that they remain up to date and compliant and continue to serve the evolving needs and expectations of their customers.
Data Drivers: Put data in the driving seat. This is where most firms have spent much of their time the past few months. The FCA have been clear that they don’t want to see firms simply recycling or renaming existing data, which many firms with resource constraints appear to have opted for. Firms are expected to work backwards, first asking what type and level of granularity of data is needed to monitor and evidence outcomes, then designing the data to feed into the management information and metrics needed. In addition, decision-making should transition to an evidence-based paradigm. This shift mandates firms to adopt robust data and metrics and move towards quantitative reporting.
Champion the champion: If you were to ask ever member of staff at your firm would they know the name of the Champion? Highlight your champion and equip them with the information they need. Listen to and support the newly appointed Champion and where challenges are raised, ensure they are raised in front of the right audience and always minuted.
Culture is key: Amidst these tangible facets, a firm’s intangible culture stands out. This should be the compass that directs employee actions, decisions, and perceptions. A culture that fosters the Consumer Duty's principles, emphasising consumer well-being, becomes essential. This also includes providing staff with a psychologically safe environment where they feel comfortable to speak up and raise concerns. Every stakeholder, be it an employee or a third-party, must resonate with the Consumer Duty's essence. Crafting, nurturing, and measuring this culture, thereby, assumes paramount importance.
Don’t hold a grudge: The truth can hurt. Whether this is employee feedback or customer surveys, firms may hear things that contradict their internal perception and outside image. Don’t suppress this flow of information, encourage it. A firm cannot grow or improve customer outcomes unless it listens to its employees and customers and of course, acts on it.
In a nutshell, the Consumer Duty's BAU embedding isn't just about compliance; it's about commitment. A commitment to consistently deliver value, uphold consumer trust, and shape a future where consumer well-being isn't an afterthought but a foundational principle.
Should you need expert guidance or access to resources, like our Consumer Duty Checklist, reach out to Zoe Keen. More details can be found at Consumer Duty Solutions at Leaman Crellin. We also offer Health Checks for firms to ensure that their regulatory health is optimal. Given the challenges of embedding Consumer Duty, we stand ready to assist you on your path to compliance.
