FIN.

FCA publishes findings from insurance multi-firm Consumer Duty review

The FCA has published the key findings from its review of 20 larger insurance firms’ approaches to outcomes monitoring under the Consumer Duty. These included general insurers, life insurers, intermediaries and regulated third-party outsourcers which service insurers.

Some firms have made good progress in developing a clear and comprehensive firm-wide approach to monitoring customer outcomes. However, the FCA also identified areas in which improvements could be made. For example:

  • some approaches were overly focussed on processes being completed rather than on the outcomes delivered;
  • some board or committee reporting contained limited insight into actual customer outcomes. This was often because of:
    • metrics/data not being comprehensive enough;
    • data which lacked analysis and explanation;
    • thresholds/standards in place which did not appear to be appropriately set and/or communicated;
  • few firms were able to provide clear evidence of where the monitoring of outcomes had directly led to proactive action being taken to improve these outcomes, where necessary.

As part of its detailed findings, the FCA has set out examples of good and poor practice, both in terms of outcomes monitoring but also in relation to the four Consumer Duty outcomes.

The FCA urges all firms operating within the insurance sector to consider the findings, particularly when considering approaches to monitoring outcomes on closed products and also when developing their first annual board report, which is due by 31 July 2024. Firms that identify gaps in their compliance with the Duty should act immediately and put robust plans in place to address any shortcomings.

Lucy Hadrill