Context
The FCA has published its findings on how smaller mutual life insurers meet Consumer Duty requirements and deliver good customer outcomes, sharing good practice and its expectations. The Consumer Duty sets high standards of protection for retail customers across financial services. It requires firms to deliver good outcomes in terms of products and services, price and value, understanding, and support. Firms that offer non-investment insurance products are also subject to fair value rules under PROD 4.
Key points to note and next actions
Findings from the FCA’s review:
- Target Market Statements – Firms had a strong focus on understanding their customers. However, most had broad statements to describe their target markets, and some were also unclear on who their products would not be suitable for.
- Fair value assessments – Firms had strong metrics to measure value. However, most were limited in their conclusions, often relying on one benefit, such as the ease of purchasing the product, rather than considering the overall quality of the product and related services.
- Financial operating models – All firms emphasised the importance of placing customers at the heart of their organisation. However, they were inconsistent in assessing their future viability. Some assessments were also conducted in ways that would not support timely decision making on strategic direction.
The FCA will continue to monitor how firms are demonstrating the higher standards the Duty expects, including price and value. Its recent multi-firm review – Findings from the insurance multi-firm review of outcomes monitoring under the Consumer Duty – outlines work the FCA will do to assess how firms are monitoring that they meet the Duty’s requirements.