Consumer dutyJan 25 2023

FCA: Some firms’ consumer duty plans ‘superficial’ and ‘over-confident’

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FCA: Some firms’ consumer duty plans ‘superficial’ and ‘over-confident’
REUTERS/Toby Melville

While the FCA acknowledged it had not been prescriptive on the champion role, firms sharing the role was "not what we intended and our view is this will not be an effective approach given the extent it is likely to dilute the role". 

In some plans, there was "limited information" about how the duty will be embedded in firms' cultures.

"Plans recognised the importance of a culture focused on delivering good customer outcomes but provided little explanation of tangible action the firm needs to take to ensure this is the case," the FCA said.

"Some firms' implementation work appears to be less progressed than others with gap analyses at an earlier stage and project requirements yet to be fully scoped."

If firms assume they can 'get by' largely with repackaging or supplementing existing data, then they risk not thinking deeply or afresh.The FCA

The regulator found evidence of "unclear" timelines, "confused" sequencing, a lack of definitions when it came to what actions firms intended to take, and not enough consideration for resource planning.

"Some plans noted a shortfall in budget or technology resource but without setting out plans for addressing this," said the FCA.

'Complacent about past improvements'

The FCA said many plans included high-level actions such as 'review customer-focused policies and procedures to ensure they capture and reference the requirements of the duty' and 'assess whether existing products deliver fair value'.

But it said this type of task-based description "gave no indication" of how firms have interpreted the duty's requirements and considered the challenges of how they will apply them to their businesses.

"Other plans seemed rather complacent about past improvements, initiatives or current frameworks, and their adequacy for meeting the duty or for putting the firm in good position to do so," the FCA said.

On a data front, the regulator also said that not all plans clearly explained what data was required to monitor compliance with the duty.

In some cases, the FCA said firms' data strategies seemed to be "largely based on repackaging existing data", with limited consideration of gaps or the outcomes it is intended to monitor.

"If firms assume they can 'get by' largely with repackaging or supplementing existing data, then they risk not thinking deeply or afresh about the types and granularity of data that they will actually need to monitor and evidence outcomes under the duty effectively."