A blog from Jonathan Pearson, head of consumer policy at the FCA, notes that now that firms are into the third cycle of Consumer Duty board reports, the FCA has seen gradual improvement in report quality, but that firms can still do more. It says the reports should provide clear evidence about outcomes which will help boards to challenge and lead to better product design and better customer communications.
Comparing year 1 and 2 reports, it has seen improvements in:
- stronger governance and clearer Board oversight;
- better action plans and ownership; and
- broader and more insightful data – including on identifying and monitoring outcomes for vulnerable customers.
But firms should focus on improving:
- clear linkage from data to consumer outcomes – Boards need more than just MI dashboards, there should be an explanation of how it evidences outcomes;
- monitoring outcomes delivered by third parties – firms need to act proportionately to take responsibility for the outcomes their products deliver, regardless of who interacts with the customer. The FCA will be consulting on changes to its rules and guidance on distribution chains later this year as it knows some firms struggle to know what a proportionate approach should be;
- evidencing meaningful Board challenge so that it is clear how senior leaders have tested the evidence they are given; and
- deepening assessments of consumer understanding and support.