The FCA has published the results of its multi-firm review into how 23 payments firms have implemented the Consumer Duty. It carried out its survey in January, and included firms from across the payments portfolio. It rated just over half the firms as satisfactory but found the other half had only partially implemented the Duty and significant work was needed to comply with it. Key messages were:
Good practice
- the best firms had a systematic approach to implementation, working from identifying their target markets and what the good outcomes would look like in each area, and had a clear governance strategy to monitor compliance and address shortcomings
- regular summary MI aligned to each outcome using RAG ratings to report to the Board worked well
- firms applying high monitoring standards with MI reports on agents as well as themselves
- having metrics that were clearly aligned to and evidenced Duty outcomes
Concerns
- some firms thought their products did not present risks to consumers and so did not need to make any changes. As a result, they relied on existing procedures and made fewer challenges
- some firms had not clearly defined their target markets or set out the good consumer outcomes they wanted to deliver
- firms not being able to show how they were monitoring compliance
- many firms could not provide analysis to support their fair value assessments
- low levels of evidence of testing of customer communications
- lack of evidence of much change in how information was reported to boards, and not enough evidence of Consumer Duty Champions bringing concerns before the Board
FCA expectations
- that firms specify their target markets to a sufficiently detailed level
- that firms must properly oversee their agents’ compliance with the Duty
- effective testing of communications
- readily available consumer support
The FCA now asks firms to consider how their firm performs against the good practice expectations and to address any shortfalls or gaps. It reminds firms to expect to be asked for their Board reports and supporting evidence.