
Consumer Duty: Key Findings from Insurance Multi-Firm Outcomes Monitoring Review
With things somewhat quiet from the regulators due to the impending election, we can always rely on the Consumer Duty to keep us busy during such periods.
In December 2023, the FCA requested the most recent board/committee reporting from 20 larger insurance firms. They asked these firms to demonstrate how they are monitoring, assessing, and testing the outcomes customers are receiving, along with any actions taken when identifying poor outcomes.
The FCA has now published its findings, which include examples of good and poor practices. The overall message is that many firms need to improve their monitoring to determine whether they are delivering good outcomes for retail customers.
Key Highlights
Poor Practice:
- Approaches overly focused on processes being completed rather than on outcomes delivered.
- Reporting contained limited insight into actual customer outcomes (e.g. due to metrics/data not being comprehensive enough, a lack of analysis/explanation, or inappropriate thresholds/standards being set).
- A lack of evidence where the monitoring of outcomes had directly led to proactive action being taken to improve customer outcomes.
- Some firms showed limited monitoring of outcomes for different groups of customers, including a lack of monitoring of outcomes between customers with characteristics of vulnerability and other customers.
- The FCA observed some firms placing undue reliance on complaints data.
Good Practice:
- Some firms had carefully considered the suite of metrics and data required to monitor customer outcomes in the context of their business and mapped these against each of the four Duty outcomes.
- Documenting a range of key foreseeable harms relating to a product or service, leading firms to better determine what data they required to monitor outcomes to avoid these harms.
- Increased emphasis on testing customer outcomes by better understanding customer journeys.
- Clear articulation of tolerances for all key metrics, with formal governance established to ensure appropriate levels and annual scrutiny.
- Combining a wide range of metrics and data, broken down to the product (or product group) level to better understand whether good outcomes on price and value were being achieved.
What Firms Need to Consider:
There are numerous other examples of good and poor practices identified by the FCA. Firms should consider these in full and determine whether any gaps exist within their current processes or if they can learn from some of the good practices identified by the FCA.
The findings should be used when firms are considering approaches to monitoring outcomes on closed products, as required from 31 July 2024. These findings can also support the development of their first Consumer Duty annual report, due by 31 July 2024.
As highlighted by the FCA, firms that identify gaps in their compliance with FCA rules should act immediately, putting robust plans in place to address any shortcomings.
How We Can Help:
With all the regulatory publications and MI requirements around the Consumer Duty, it can be easy for firms to get lost in the endless updates and information stemming from the Duty. Padda Consulting can offer an independent analysis of your approach to the Consumer Duty and identify any gaps that may exist as a result of these recent findings by the FCA.
Additionally, our partner company, Ever Comply, is already helping firms tackle the requirements of the Duty with a specific module designed to approach the Duty efficiently. This tool provides a direct compliance solution for firms that may benefit from the compliance expertise it offers. If you want to discuss our work with Ever Comply or would like a demo of the system, please contact us here.