MorganAsh comments on FCA's review of Consumer Duty board reports

12 December 2024

Andrew Gething, managing director of MorganAsh, said: “The FCA’s review into 180 Consumer Duty board reports is yet another reminder of the crucial role that good-quality data plays in meeting the FCA’s requirements and demonstrating compliance. Not only did some firms lack sufficient quality data, but there was also a lack of consideration towards all customer groups – particularly vulnerable customers. Given ongoing communications from the FCA, and recent action with hefty fines levied, it is further proof just how much of a priority this is for the regulator.

“Robust data is the cornerstone of Consumer Duty – it’s necessary for good MI and essential in identifying who are vulnerable customers are – let alone how their outcomes compare to resilient customers. Rather than relying just on those who reach out, or repackaging existing data, firms need to adopt a consistent and objective measurement of customer vulnerability. With the right systems and processes in place, firms can monitor outcomes throughout the lifetime of products, make necessary improvements and then report on their findings.

“While recognising that smaller firms don’t always have the same resources, demands or indeed customer challenges, the report reaffirms that small businesses still have the same responsibility to ensure good customer outcomes. This is an important reminder to those firms hoping to fly under the radar. These businesses need to learn the lessons from customer interactions and make improvements where necessary. Once again, good-quality data and good systems will help to ease any potential difficulties.

“It’s important to note that the regulator wasn’t expecting these reports to be perfect, but to at least show positive steps towards meeting its requirements and delivering better outcomes. In our view, a key challenge is a lack of understanding among many firms as to who their vulnerable customers are – and a slowness in adopting new technology to meet this key requirement.

“Most of all though, it’s the view that Consumer Duty is just another regulatory headache. In reality, we have seen examples of firms which have embraced Consumer Duty and unlocked the competitive advantage of offering a better and more personalised service – especially to those vulnerable customers who are currently underserved. There’s no doubt that the right technology and the right data is absolutely key in achieving this breakthrough.”