FCA has published its conclusions from a multi-firm review it carried out in the retail banking and lending sector, to help it understand how firms had approached reviewing their products and services against the Consumer Duty standards as part of their implementation programme. It looked at 70 product journeys across 47 firms.
The key findings were:
- good examples of clear frameworks, many of which referenced FCA’s finalised guidance, which made it easy to see how the frameworks applied against different products and services , and which included the metrics and reasoning applied;
- good examples of supplementary frameworks and guidance to set baseline standards of good customer outcomes, including customer comms playbooks and training;
- good examples of assessments that clearly covered the end to end customer journey across products and services – including requirements to answer key questions within outcomes and provide evidence;
- some firms were better at using a good range of data points than others;
- many firms had clear plans for addressing gaps, but not all had considered the potential risk of harm if they failed to address them in time;
- not all firms provided complete outputs and some merely stated they had not identified any harms but did not produce any supporting evidence;
- the better frameworks had clearly identified the target market and who the product was and was not suitable for, and had considered a wide range of distribution channels and strategies;
- some firms had considered qualitative factors and quantitative factors (such as looking at matters such as relationship manager feedback and numbers of complaints), and the better firms had evidence to show how they were assessing product performance in differing market conditions and customer circumstances;
- some firms had not fully considered the treatment of vulnerable customers;
- the better firms had used a range of testing to help review customer understanding and put in place clear actions to identify any improvements needed;
- some firms had applied frameworks across their products to review a range of customer journeys for customers in financial difficulty and had improved the language they used with these customer;
- a few firms had introduced specific markers to route fraud related calls to appropriate call handlers;
- many firms had identified and addressed “sludge” issues which were making it unnecessarily hard for customers to report bereavements and deal with deceased persons’ accounts;
- FCA was disappointed that many firms did not appear fully to have considered BCAs – but of those that had, it was pleased that some firms had managed to make switching easier. But it was also disappointed that very few firms were able to identify vulnerable customers with BCAs; and
- firms had generally improved their practices where they had used products to consolidate debt but only a few had clear communication plans to support customers, and several firms did not consider that consumers were using mortgages for debt consolidation purposes.
FCA will continue to monitor sectors and firms, and reminds firms that the CD applies to closed products from 31 July 2024, and that Boards must at least annual review and approve an assessment of whether the firm is delivering good outcomes for customers consistent with the CD.