thoughts & threads

The Financial Conduct Authority’s (FCA) Consumer Duty regulations, effective since July 2022, have introduced stringent reporting requirements for regulated firms. These rules mandate annual board reports assessing customer outcomes against the FCA’s high standards, aiming to ensure that customers receive fair value and service.

Key Findings from the CII’s Research

The CII, in collaboration with FWD Research, explored how firms are adapting to these requirements. Through surveys and discussions, several critical insights emerged:

• Challenges in Identifying Vulnerable Customers: A substantial 34% of firms reported difficulties in gathering evidence of outcomes for vulnerable customers, highlighting a gap in understanding and addressing their needs effectively.
• Data Gaps: Many organisations lack sufficient data on customer behaviours, preferences, and vulnerabilities, which are crucial for creating robust Consumer Duty strategies.
• Clarity and Consistency in Standards: Firms expressed challenges in measuring compliance without uniform metrics or standards, signalling the need for industry-wide guidance.

Recommendations for Firms

The CII White Paper provides actionable guidance to help firms excel in their Consumer Duty responsibilities:

1. Embed Data into Processes: Use data insights not only for compliance but as a cornerstone for improving customer experiences and product development.
2. Collaborate with Experts: Engage professional bodies to enhance survey methodologies and unstructured data analysis, benefiting consumers directly.
3. Proactively Address Vulnerabilities: Identify customer vulnerabilities and implement tailored support strategies for better outcomes.
4. Cross-disciplinary Approach: Foster collaboration across teams to utilise insights effectively and drive positive changes.
5. Elevate Leadership Focus: Boards must actively champion customer outcomes, reinforcing the importance of prioritising consumer interests.

Looking Ahead: Sector-wide Discussions

The White Paper also raises important questions for broader dialogue:

• How can firms better identify and understand customer vulnerabilities?
• What guidance can regulators provide to ensure consistent reporting and data use?
• Can shared industry standards improve efficiency and compliance?

The Path Forward

The CII’s findings underline the importance of robust data strategies and a customer-first mindset in delivering on Consumer Duty promises. Firms are encouraged to adopt best practices, collaborate across sectors, and align closely with regulatory expectations.

For those navigating the challenges of Consumer Duty, this White Paper serves as both a guide and a call to action, ensuring that the principles of fairness and care are upheld across the insurance sector.

To read the full White Paper – Consumer Duty board reporting click here