On Consumer Duty, some inspiration - and words of warning - for retail banks

The FCA has published findings of its multi-firm review of retail banks' Consumer Duty implementation.

A broken record

This review was on the cusp of the July 2023 implementation deadline.  It's unclear why the FCA took five further months before publishing (relatively brief) findings.  

Given this delay, it's unsurprising that the expectations it communicates are high-level and predictable.

But you need to read between the lines for the key risk mitigation point.  It's this: so many of the FCA's criticisms are about evidence, not conduct in itself.

In other words, they don't stem from shortcomings in the firm's implementation work.  They stem instead from a firm's inability to show the FCA evidence of that implementation work.

This came to a head in the FCA's criticism of some firms' results and findings of their product reviews.  It was disappointed by some firms' failure to show the FCA detailed findings and/or supporting evidence.

So: document, document, document!

More nuggets

There are some other useful points within the FCA's findings.  They're in the form of good ideas that others have implemented, some areas to improve, and some areas of clear FCA displeasure (your risk mitigation alarm bells should be ringing again).  Let's draw them out.

Ideas to think about

• On frameworks and methodologies, set baseline standards for customer outcomes.  Feed these into supplementary frameworks or guidance.  Hold workshops with different teams to align their interpretations.
• Use a range of data points rather than a single source of insight.  Helps fill in any blind spots.  This includes in communications testing: different testing methods can complement one another.
• On distribution strategies, can you demonstrate target market controls with monitoring of their effectiveness?
• Build data to identify trends in the journeys of customers who could be in the early onset of financial difficulty.
• In automated call handling, introduce fraud markers to route calls directly to fraud operations teams.

Some areas to improve

• Put adequate monitoring in place when launching, or adjusting, products.
• On debt consolidation mortgages, keep working on addressing common challenges in the distribution chain that could cause delays in the customer journey.

FCA displeasure

• In your product reviews, ensure that you document how you consider the treatment of vulnerable customers.
• Implement the Consumer Duty for your in-scope business current account activity to the same level as you do for other in-scope products.  Particularly when it comes to value assessments and identifying vulnerable business current account customers.
• Where a product allows for debt consolidation - even if that isn't its intended purpose - you still need to "meaningfully consider" the debt consolidation customer journey.