The FCA’s Consumer Duty is a significant change from traditional rules-based compliance for processes and documents to a principles-based regime focused on outcomes for every segment of customers. It requires firms to be thoughtful about how those outcomes are delivered. It shares a lot of common ground with strategy with its shared emphasis on target markets, pricing strategy, customer experience and communications with customers. Like strategy, it’s natural home is with senior management and the Board.
The FCA requires that firms annually prepare a Board Report on Consumer Duty, discuss it fully and take prompt action to put things right when outcomes are not good enough. The Board report is the first thing that the FCA will ask for if it wants to know if a firm is delivering on the Consumer Duty requirements. The FCA has reviewed a large sample of Board reports – and it seems that they have concluded that many firms have struggled, and a lot of improvement is needed.
Over the last few months, the FCA has been urging firms – especially smaller firms – to find and engage a “critical and knowledgeable friend” who can help them to get it right.
We have helped two banks (one UK, and one foreign) with their approach to Consumer Duty, and the preparation of their first Board Reports. In these reviews, we helped senior management to zero in on the most critical and material issues including the most important: were there any poor outcomes that needed swift action? We were able to use our knowledge of how the businesses actually work and of regulation to save time and money. Our approach is in marked contrast to those that rely on filling in extensive, generic and unwieldy compliance templates, at vast expense. By applying Board-level thinking to the Board reports we can quickly help firms deliver a report which is comprehensive, focused and compelling, with a strategy that is good for firms and customers.