Context
The FCA has published two further Consumer Duty good and poor practice reports, as part of its ongoing efforts to help firms embed the Duty and provide more clarity on its expectations. The first of these is in relation to Consumer Duty Board Reports. These findings highlight good and poor practice on how firms are tracking consumer outcomes, acting on insight, and giving senior management the means to challenge and drive the improvements needed to deliver the Duty.
Firms must find their own approach to embedding the Duty, based on size, activities, and resources. The FCA hopes that the published findings provide the extra insight the industry has asked for, and show how the information it requests from firms is being used to help them deliver the Duty. Of particular interest is the FCA’s continued use of commentary focussed on small firms.
Key points to note and next actions
The overall findings contained five areas of general good practice. The best reports were structured in a way that made them easy for their boards to scrutinise the key elements that the rules and guidance suggest they should cover:
- Clear outcomes focus
- Good quality data
- Analysis of different customer types
- Clear processes for production of the report
- A focus on culture throughout the firm
The overall findings also highlighted five areas for improvement:
- Better data quality
- Comprehensive view across distribution chains
- Analysis of different customer types
- Challenge from the board
- Taking effective action.
In relation to smaller firms, the FCA found areas of good practice from firms of all sizes, including those with fewer than 10 employees. As such, much of the good practice and areas for improvement cited in the report applies to firms of all sizes. The FCA acknowledges that smaller firms have different challenges, so has set out suggestions for how smaller firms might meet its requirements. The FCA is open to considering more targeted work where that would be beneficial. Some headline ‘smaller firms’ findings are set out under four headings:
- Governance
- Monitoring and Outcomes
- Actions taken to comply with Duty obligations
- Future business strategy