May 22, 2023 | Amanda Khatri
Estimated reading time: 5 minutes
Table Talk series: Consumer Duty roundtable
CUBE recently hosted an insightful roundtable on the Financial Conduct Authority’s (FCA) Consumer Duty. Renowned firms in the investing, banking and insurance industries came together to discuss what steps they have taken to implement the Duty into their current business strategies.
We uncovered where each firm stood in terms of its implementation journeys and gave advice on how to comply with the Duty requirements. Under Chatham House rules, CUBE and attendees could exchange thoughts, fears and opportunities without prejudice.
We will be running various roundtable talks throughout the year on hot topics such as ESG, blockchain and more. If you are interested in being invited to CUBE’s exclusive Table Talk series to connect with industry experts, please contact us.
Uncovering the key roundtable themes
1. What does good look like?
The Duty asks firms to prioritise good outcomes for customers, but what is a good outcome? What good looks like can differ for every company. For some firms, good outcomes are when a customer understands the product or service and can make a well-informed decision.
One question asked at the Table Talk was – what about customers that do not even know they have had a bad outcome?
2. Is the Duty a challenge or an opportunity?
Most of our attendees agreed that the Duty is both a challenge and an opportunity. In the short term, it is more of a challenge as firms need to identify what is expected of them and make changes to reflect the regulation. Whereas it is an opportunity in the long run and can provide a certain competitive edge which can help with customer retention. Just as consumers check the reviews of a product or service before purchasing, a customer would more likely choose a firm that considers the fairness of services for consumers over one that only prioritises profits.
This, however, leads to one question, how will the FCA differentiate between a company that considers good outcomes over a firm that does not?
3. How can firms measure good outcomes?
There is a lack of guidance around how firms should collect and measure good outcomes, leaving a few firms to feel less confident about their implementation process ahead of the 31 July 2023 deadline.
Having this data not only prepares firms for when the regulator asks for their annual report but can also help during the implementation stage. The FCA has outlined that the report will need to feature metrics on how customer outcomes are measured and showcase their KPIs.
Tips on how to survive the Duty deadline
1. Using surveys and platforms like market research platforms
Firms could use incentivised surveys or questionnaires to get a proper sense of whether the customer has understood what the product or service is. A platform like Askable allows you to target specific age groups and job titles to review company promotions or T&Cs to check for understanding.
One attendee commented that it is not just about presenting the metrics, it’s about the whole picture by having higher standards across the board.
2. Read FCA guidance
The FCA has recently sent out surveys to see how firms are doing with the implementation, therefore, expect more guidance. Their tips are always very helpful – they also do roadshows!
3. Data collection
The FCA will be asking for an annual report to explore how the firm got to the end of the implementation and how they think they compare to competitors.
4. Educating board members, senior managers and employees
Coming up with the KPIs and what a good customer outcome means to your firm is just the first step. Next firms need to embed the Duty in corporate culture, starting from the top. This starts with educating boards and senior employees about what good outcomes are and even giving the floor to them to challenge to ensure even better outcomes.
Types of training could involve video training sessions and tests, incentivise employees to adhere to the Duty rules and if they do not, maybe even bonuses could be taken away. Firms could introduce Consumer Duty Awareness Day or Week, ensuring the entire company is taking part to show its importance. To propel this further, internal champions could be flagged and rewarded, and performance reviews could be used to flag if an employee is not acting accordingly to Duty. Further to this, a multi-channel process of communications could be used – email, teams, and socials – to ensure the message really gets across and is embedded into the company ethos.
This should be completed ahead of the deadline and boards should be engaged much earlier in the stage. For many firms, the culture has not been embedded from the top.
5. Do your own research
There are several industry associations that firms can use to receive relevant guidance on regulations, not just the Duty.
Final words of wisdom
The FCA did not introduce the Duty to catch out firms and call out bad actors. The cost-of-living crisis means that it is now more important than ever for financial services to treat customers better and think about how their actions can lead to good consumer outcomes.
If you have any questions or would like to find out more about CUBE, the roundtables or how CUBE can help your firm with regulations such as the Consumer Duty, contact us below.
Discover how CUBE can help your firm with consumer protection regulations.