Few organisations manage all operations in-house. Therefore, your team likely works alongside third-party providers to offer a comprehensive service to customers. How do you ensure Consumer Duty compliance in your distribution chain?

Accountability for Third Parties

Many regulated companies partner with third-party providers. These include external call centres, claims management firms, and collection agencies. In addition, you may use approved networks to provide repairs, meter readings, and website development services.

These external partners are not employees; however, from your customers’ perspective, they are representatives of your company. So, if they deliver poor service, it’s your business reputation that takes a hit. If expectations aren’t met, your customers will hold you accountable.

What’s more, it’s not just customers who believe responsibility for third-party services remains with the main provider. The FCA states, “UK regulated firms retain full accountability for good customer outcomes, even when functions are outsourced or distributed through third parties.” So, if they are not compliant with Consumer Duty, you’ll pay the fine.

This accountability for third parties raises the question of how your organisation ensures that external service providers are up to speed with Consumer Duty.

Barriers to Consistent & Compliant Services

In our work with firms and suppliers, we hear examples of barriers to consistent and compliant service provision. Some recent examples include:

• Insufficient checks on third-party policies and processes that relate to Consumer Duty, including data security and safeguarding, before contracts are assigned.
• Internal teams are given training and resources to equip them to identify and respond to vulnerable customers. However, there is no training or resources provided to outsourced teams.
• Lack of vulnerability data being shared with external teams, which can result in difficult conversations, frustrated customers, poor outcomes, and a risk of harm.
• No checks, such as listening in on calls, accompanying visits, or specific data monitoring, to assess whether standards are being consistently met by third parties.

Do any of these barriers exist in your distribution chain?

Appropriate Information Sharing

The FCA’s latest Consultation Paper, CP26/23: Scope & Proportionality, recognised that distribution chains are one of the most challenging aspects of Consumer Duty. Specifically, they noted barriers to proactively sharing information that is genuinely useful for serving customers and reducing the risk of harm.

GDPR Compliance

With GDPR and security risks, it is understandable that firms aren’t openly sharing information along the distribution chain. However, shared insight saves the customer repeat disclosures, duplicate conversations, and recommendations of inappropriate products. Achieving good service and better outcomes requires effective communication.

Two-way Communication

Information needs to travel in both directions. For example, Independent Financial Advisors and Brokers also have a responsibility to pass information to insurance companies and mortgage lenders. So, agree on a system that works for both parties and use it.

Recording Information

Our advice for recording information for both internal and external use is to focus on solutions. What does the customer need from you? Record that a payment plan has been agreed, rather than the reason they needed to speak to a debt adviser. Note their communication preferences, without details of health conditions or working patterns.

This approach helps others in the distribution chain to understand needs and provide appropriate services. However, it limits the personal information that is recorded.

How to Address Barriers to Consistent & Compliant Services

It takes vigilance to build a trusted and compliant service with third parties, so we have some advice.

Relevance – Not all in the distribution chain are customer-facing, so they may not believe this is relevant to them. However, they still need a clear understanding of Consumer Duty if their products and services impact customer journeys, decisions, and outcomes.

Research – Before deciding on distribution partners, research their customer journeys. Is the process inclusive and easy to navigate? Does it align with your messaging? If anything raises a concern, discuss it. Remember, this will reflect on your business reputation.

Policies, Processes & Training – It is important to confirm that external organisations have appropriate policies, processes, training, and support in place. This can be part of the criteria for awarding a contract. Alternatively, you might share your policies and resources with the team and include them in skills development activities.

Information Requests – Agree on how information sharing will be handled and what details are required to ensure the best customer outcomes.

Reviews – As part of your working agreement, include ways to regularly review that customers are receiving fair value, appropriate responses, and good outcomes. Use a combination of performance metrics, colleague and customer feedback, call monitoring and mystery shoppers.

What else do you want in place to feel confident that your organisation remains compliant and relevant?

How Can We Help?

Our resource library includes policy templates, guides, and webinars, which are designed to support compliance with Consumer Duty. Download and use them with internal and external teams to build awareness and drive consistency.

If you have any questions about specific support for working with third-party organisations, please email info@helenpettifer.com, and we’ll get back to you with relevant options.