The FCA has highlighted lapses in this regard, including the promotion of high-risk or complex products, opacity on fees, and insufficient consideration of consumer understanding.
Firms are urged to re-evaluate consumer vulnerability, ensure transparent communication, and substantiate the rationale behind complex or unregulated investments.
We have seen a number of good practice examples of firms which, as part of their consumer duty implementation project and subsequent business as usual activities, have developed robust consumer duty dashboards that capture useful outcomes-focused metrics that are helping them shape their business.
Some of our clients have created standalone consumer duty committees attended by board representation (normally the consumer duty champion), the executive committee and representation from all three lines of defence.
These committees, as part of their terms of reference, are focused on translating the data from their dashboards into tangible enhancements to their business, including making changes to their communications to make them clearer or to provide additional routes of contact for customers to get in touch with the firm.
They have built metrics using data from advice suitability calls to highlight themes of customer issues to shape how they engage with customers in the future.
In other good examples, advisers have been provided with robust and specific training that has been bespoke and designed to help them understand the impact the duty has on the way they carry out their responsibilities.
Supportive guidance and updated procedural documents have also been shared with advisers to ensure they have all the relevant information and tools available to aid their interactions with customers.
Overall, we see that the firms that have captured the spirit of the consumer duty within their culture are producing far greater and more useful data to help them drive change than those that have employed a minimum standard approach.
In addition, firms that have developed training and supporting tools for their advisers see a far greater level of consistent understanding of good outcomes being achieved.
Unpacking price and value
Fair value takes centre stage as the FCA urges firms to regularly assess the cost and value proposition of their products and services.
Concerns span overcharging for undelivered services, fee opacity, and failure to pass on fair interest on client money balances.
This has been particularly evident in the ongoing service offerings where customers pay for periodic reviews that are not delivered or are quoted prices but do not provide the breakdown of what makes up the price.
Firms are required to implement corrective measures when subpar value is identified and to scrutinise all revenue streams across the value chain.
