Consumer Duty regulations are outcomes-based. They require firms to identify the cause of poor customer outcomes and take action to put things right. The challenge comes in how to monitor and evidence improved outcomes. As an area we are often asked about, we want to share some points for consideration.

Identify, Action and Evidence Outcomes

Consumer Duty requires your firm to act in good faith to help customers avoid foreseeable harm and achieve their financial objectives.

In line with the regulations, your company has likely reviewed:

• Communications to improve readability and understanding to ensure customers are equipped to make informed decisions
• Products & Services to confirm they are fit for purpose and provide fair value
• Customer services and customer journeys to be certain they are responsive and helpful in every interaction
• Training to be certain your team is equipped with the skills and confidence to identify and respond to customers facing vulnerable circumstances
• Policies and processes to update in line with Consumer Duty

However, what you’ve reviewed and even the actions taken to resolve issues are not sufficient for the annual Board report. The FCA wants evidence of the difference these steps have made.

• How many more of your customers can access clear, concise and timely information that aids their decision making?
• What percentage of customers state that your services are competitively priced and offer fair value?
• Has there been a decline in customer complaints or cases reported to the Financial Ombudsman?
• Is there evidence of reductions in poor service, missed opportunities, errors and absenteeism of colleagues?
• Is there evidence that action has been taken where there is known foreseeable harm to customers?
• How are policies and processes allowing appropriate actions and consistent good service?

With the July deadline for the first annual Consumer Duty Board Reports approaching at speed, your firm needs to gather, compile and review comprehensive data on outcomes. So, how do you meet the requirements for reporting and to inform the future strategy and improvements of the business?

Monitor & Evidence Consumer Duty

An important activity in evidencing outcomes is to map out your customer journey and identify all interactions between you and your customers.

At each of these touchpoints, consider and assess:

• The information, options and support available to the customer
• Related internal systems and processes
• Measurable data – current stats, goals andall customer insight
• Gaps in provision
• A testing approach that forms part of your Management Information (MI) framework, which could include customer and colleague surveys, focus groups and mystery shoppers
• Specific needs of customers facing vulnerable circumstances

In addition to internal assessment, it is valuable to proactively gather customer insight. As an example, you might survey all customers researching pension products and services in a specific month of the year.

• Did they find your website easy to navigate and if not, what issues did they experience?
• Did they find and understand relevant information and if not, what was unclear or missing?
• Did they call, book an appointment or drop in to get advice, if not, why not?
• What are their thoughts on the service and advice provided and are there ways it could be improved?
• Did they understand the process and what would happen next and if not, what further information would be valuable?
• Did they or do they intend to go ahead and purchase your pension products and if not, why does it not meet their requirements?
• Have they received follow-up information or support since their initial enquiry and was this helpful?

Now, consider potential vulnerabilities that might impact this customer group. This includes visual and hearing impairments, digital exclusion, bereavement, reduced financial resilience, caring responsibilities, dementia and more. What measures are in place to reduce the impact of these vulnerabilities on the customer achieving their desired outcome? What more is needed?

Board Reports

The FCA requires Boards to ‘review and approve a firm’s assessment of whether it is delivering good outcomes for its customers, which are consistent with the Duty and agree any action required’.

There is an expectation that Board reports provide the full results, including where weak practices, inconsistencies, gaps and poor outcomes are identified. In these areas, the next step is root cause analysis. The root cause of the issue should be analysed holistically from the customer shoes and with involvement from individuals in all departments. This should inform appropriate solutions that prevent issues from occurring.

This reporting process is an annual requirement and the FCA has provided information to outline the key outcomes and support Board reporting: https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf

It is recommended that a Vulnerability champion sits on the Board. With awareness of the drivers of vulnerability, they focus on outcomes for customers facing vulnerable circumstances and challenge practices to drive positive change.

Consumer Duty is considered a process of continuous improvement. Therefore, whatever progress has been made and evidenced, further work will be required to enhance consumer outcomes. For this reason, the Board report must also contain the future business strategy.

Evidencing Compliance with Consumer Duty

Compliance with Consumer Duty has been a requirement of all FCA-regulated firms since July 2023. We have seen some excellent progress in identifying needs, improving processes, upskilling teams and improving outcomes. Reporting is your opportunity to evidence the impact of these measures.

Compiling these first annual Board reports will be a time-consuming challenge. However, once set up, the same outcomes testing and processes for gathering evidence can be replicated in future years.

If FCA feedback suggests significant improvements to your services, outcomes measuring or reporting are necessary, we offer consultancy services, vulnerable customer training and downloadable resources. Let us help you turn things around for your firm, employees and customers.