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Consumer Duty: Implementing culture, governance and accountability

This article looks at how firms should approach the new Consumer Duty's requirement of implementing an appropriate culture, governance and accountability.

First, let's look at what the Consumer Duty or 'the duty' is composed of.

Principle 12 - A new Consumer Principle: “A firm must act to deliver good outcomes for retail customers”

Cross-cutting rules that firms must:

- Act in good faith towards retail customers

- Avoid foreseeable harm to retail customers

- Enable and support retail customers to pursue their financial objectives

Four outcomes:

- Price and value

- Products and services

- Consumer understanding

- Consumer support

Culture, governance and accountability

The FCA expects firms to place customers at the centre of their culture. Firms are expected to align their purpose with the Consumer Duty.

Leadership – should be competent and accountable and demonstrate commitment to the Duty.

People – delivering good customer outcomes should be reflected in the way in which people are trained and delivered

Governance – controls and processes should enable firms to identify where they are not delivering good outcomes and have a strategy to tackle the root causes and manage poor outcomes. Firms should have a champion on the board to discuss the Consumer Duty.

Firms are expected to produce a board report in which they demonstrate a clear assessment that is delivering good outcomes, at least annually. They should discuss the results of monitoring, an overview of actions taken, and how future commercial strategy is consistent with delivering good outcomes. This will be required as part of the evidence the FCA needs to see to assess a firm's compliance with Consumer Duty. It must be available on request with the report and MI that sits behind it.

Key considerations for firms

  1. Does your firm's purpose align with its obligations under the Consumer Duty? How is it embedded and understood throughout the organisation?

  2. How does the firm's culture support the delivery of good outcomes for customers?

  3. How does your firm ensure that individuals throughout the organisation – including those in control and support functions – understand their role in delivering the Consumer Duty?

  4. Are staff empowered and feel safe to challenge and raise issues where they feel the firm might not be acting to deliver good outcomes for customers? Are those challenges listened to, and where necessary, acted on?

  5. Is the Consumer Duty being considered in all relevant discussions such as strategy and remuneration? Are customer outcomes a part of the firm's risk assessment and internal audit?

  6. How is the firm ensuring that its remuneration and incentive structures drive good outcomes for customers?

Key considerations for firms to help achieve good outcomes

  • Is the firm prioritising acting to deliver good outcomes for customers? Are there any areas of concern?

  • How is the external environment changing, and how will that impact the firm's ability to deliver good outcomes for customers?

  • Has the firm identified the key risks to its ability to deliver good outcomes to customers and put appropriate mitigants in place?

  • How does the firm define good outcomes (over the short, medium and long term) for customers using its products and services?

  • What data does the firm have about its customers and how they use its products? Are there any gaps in the data? What steps is the firm taking to address them?

  • What outcomes are customers getting? Are they getting good outcomes which align with their reasonable expectations?

  • Are certain groups of consumers getting different outcomes, and if so why? What’s driving any adverse outcomes?

  • What actions is the firm taking to improve outcomes? (Who’s accountable for this work, what will improvement look like and when will it happen?)

  • SMCR – Are senior managers set clear responsibilities for complying with the Consumer Duty?

How Regulatory Counsel can help

​In helping firms implement the Consumer Duty requirements, we are helping firms in a number of ways from complete project management and providing specialist project resources to adding consulting and advisory expertise as an external specialist partner.

We are one of the UK's leading regulatory consulting firms, helping companies with regulatory authorisations (licencing), compliance and consulting. Our focus and expertise have enabled us to work closely with regulators and understand the regulatory standards which are required from regulated firms.

Contact us by email at or call us on 0203 6274 724.


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