Consumer Duty has once again been catapulted to the top of firms’ priority lists as the first Consumer Duty board report is due at the end of this month. As stated here, the FCA plans to ask a sample of firms for copies of their report, so they can check whether firms are completing it and also assess the quality of the content. They have also publicly commented that they will have no tolerance for late reports.
Recurring mistakes
Preparing the Consumer Duty board report for the first time can be a dauting task. We have been approached by a number of firms asking them to review their board reports and we have identified a number of recurring issues as below:
- Firms have not agreed the good outcomes they want their customers to receive and so don’t know what they are assessing against;
- Others are unclear about the management information or data they should use as part of their assessments, or have very limited management information or data available to them;
- Where firms have identified that their products and services have caused issues, risks and harms to customers, they haven’t documented what they are, or the actions they have taken, or plan to take (including timescales) to address them.
- Some firms have gone into great detail about the policies and processes they have in place to mitigate against customer harm, without assessing whether they are operating effectively in delivering good customer outcomes; and finally
- Others have stated what they “should” be doing, rather than what they “are” doing to meet Consumer Duty.
Some tips…
Based on our experience of firms putting the board report together for the first time we have put together some tips to help firms finalise the report over the next couple of weeks.
- Ensure that you have defined the good outcomes you want your customers to receive under the three cross-cutting rules and four Consumer Duty outcomes.
- Work out the management information and data that you need, to support your assessment. Does the information you have to hand give you a clear picture of whether your firm is delivering good customer outcomes? Where you have identified gaps in management information and data, see if you can obtain it quickly, or find suitable alternatives.
- Using the management information and data, assess whether you have delivered the good customer outcomes you said you would deliver.
- In the board report itself, document the results of your assessments and the management information and data you have relied on.
- Clearly state any issues, risks and harms that have been identified (if appropriate) and an overview of how you have put things right when they have gone wrong. Where actions remain outstanding, state how you are going to fix them and by when.
- Comment on how the firm’s future business strategy is consistent with acting to deliver good outcomes under Consumer Duty.
- Focus on what you are doing, rather than detailing what the FCA expects you to do.
If you would like any further support with your Consumer Duty Board report, please do contact us below.
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