An element of “ambiguity” in the consumer duty rules could be causing “frustration” for firms, FWD Research director, Martin Grimwood, has told FTAdviser.
As an example of this ambiguity, Grimwood pointed to the duty’s chapter on data monitoring in which the FCA uses non-direct language in its titles.
He said: “The rules often say ‘you could do this’ and, when you get to chapter 11, especially 11.3, it’s types of information that firms ‘may’ want to include.
“This is one area in which ambiguity exists as what information you may want to include could change based on where you are as a firm, you are likely to have some biases.”
Another example offered by Grimwood was that of colleague feedback as he stated “that could mean two things”.
He explained that, as a huge part of the consumer duty is culture change, it could be an examination of whether colleagues have experienced that shift and, to investigate this, constantly monitored feedback from them must be measured.
Conversely, the term could also mean colleagues informing the firm as to whether good customer outcomes are being delivered.
Framework
In response to this ambiguity, Grimwood explained that one of the things he has been working on is interpreting consumer duty through both reading it and discussing it with people at the FCA.
“For our clients to move forward with any kind of confidence, we need to have that conversation,” he stated.
To achieve this, Grimwood discussed a framework which has been created to advise consultancy business FWD Research's clients on what they should be thinking about rather than what they could be thinking about.
Grimwood stated that “everyone identifies with this” and recounted that when talking with firms they have often had parts of the framework already in their consideration.
He also stated that some firms had all of the framework already and some had none and so reacted to it with positivity.
Grimwood added that, while he is unsure what the final report on the framework will look like, he doesn’t expect it to “change greatly”.
As a result, FWD is recommending to its clients to get the building blocks in place now so that they will have the ability to respond when that guidance becomes available.
Consumer duty's impact
Additionally, on the topic of the success of consumer duty since its implementation in June, Grimwood stated that “the jury’s still out on that one”.
He explained this is due to the fact that it “varies by sector” and that the challenge of interpretation exists for all these sectors.
tom.dunstan@ft.com
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