The Consumer Duty, introduced by the FCA, has notably heightened consumer protection standards within the financial services sector.
According to FullCircl, as we passed the first anniversary on 31st July 2024 since the implementation of this mandate, a significant event was held to discuss its impacts and progress.
The event featured key FCA figures including Sheldon Mills, Executive Director, Consumers and Competition; Graeme Reynolds, Director of Competition; Therese Chambers, Joint Executive Director of Enforcement and Market Oversight; and Dominic Cashman, Director of Authorisations.
Abby Thomas, Chief Executive and Chief Ombudsman at the Financial Ombudsman Service, also participated, highlighting the Duty’s impact over its inaugural year, practices worth emulating, and forthcoming priorities.
In its first year, the Consumer Duty has fundamentally altered business-customer interactions across the financial landscape, promoting cultural shifts and enhancing competition. The FCA highlighted several achievements such as the sharing of best practices, reductions in GAP product commissions—yielding customer savings—and the introduction of new product lines.
Noteworthy improvements in customer experience metrics and clearer customer communications were also emphasized. However, the FCA acknowledged that the Duty has introduced complexities, particularly challenging for smaller firms, with hurdles like fair value assessments and outcomes monitoring needing simplification.
The discussion also focused on exemplary practices that should become more widespread. The FCA identified successful firms as those aligning their culture with customer experience, adopting comprehensive approaches to customer impact, and utilising data to understand and meet customer needs effectively. A continuous improvement culture and outcomes-focused monitoring are also crucial.
The upcoming period will see a post-implementation review by the FCA to assess the effectiveness of the Consumer Duty, including thematic reviews of specific sectors and products. This review aims to gather insights on the impact and complexity of the Duty and ensure firms are delivering fair value.
After a year, the Consumer Duty has proven to be a catalyst for significant advancements in consumer protection and a more customer-focused approach in financial services. Despite these successes, the journey is far from over. Firms continue to face substantial challenges that require strategic use of AI and data analytics to enhance compliance, drive growth, and improve customer experiences effectively.
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