Context
The FCA has published multi-firm review report of Payment firms’ implementation of Consumer Duty, having asked 23 Payment firms in January 2024 how they had implemented the Consumer Duty’s requirements. Although not a sector relevant to our client base, the messages contained within the review report can be applied to all sectors, with examples of good / better practice and areas for improvement under a number of headings.
Key points to note and next actions
- Of the 23 firms, just over half were rated as satisfactory, and the FCA did not view them as presenting a risk of significant poor consumer outcomes (although some minor actions may still have been needed). However, just under half of the firms in the review had only partially implemented the Duty and required significant work to comply with it.
- The ‘satisfactory’ firms tended to have clearly articulated, customer-centric purposes and understood what good outcomes and foreseeable harms looked like for their customers. They tended to have strong governance and control frameworks which they used to scrutinise and challenge the firm’s implementation of the Duty and deliver any enhancements required.
- These firms tended to have a systematic implementation approach, starting with clearly identifying the target market for their products and services and what good outcomes looked like for products and services, price and value, consumer understanding and consumer support. They had a clear governance structure to monitor delivery of good consumer outcomes and to take action to address shortfalls in a timely manner. This included:
- regular summary management information (MI) aligned to each of the 4 outcomes reported to their Boards;
- MI which included Red, Amber and Green (RAG) rated measures with conclusions drawn from the data; and
- conclusions which clearly identified any shortfalls, the mitigating actions required and who was responsible for delivering these actions.
- The report sets out findings under seven main headings:
- Products and services: establishing the target market
- Products and services: agent oversight
- Fair value assessments
- Consumer understanding
- Consumer support
- Governance
- Management Information