Alexis Stevens, Senior Strategic Partnerships Officer, Money and Mental Health Policy Institute
Consumer Duty: firms need to get serious
3 February 2023
Last week the Financial Conduct Authority (FCA) gave its verdict on firms’ Consumer Duty implementation plans. While there are positive changes being made, the FCA has identified that some firms might struggle to embed the Duty effectively across their business.
The Consumer Duty sets clear standards of consumer protection across financial services and represents one of the biggest regulatory opportunities in recent decades to improve the lives of customers in vulnerable circumstances. For those of us with mental health problems, it’s vitally important that action is taken to address the shortfalls highlighted in the FCA’s review.
Moving beyond ‘just one question’
The FCA expects firms to have a Consumer Duty champion at board level, and a firm’s board (or equivalent governing body) should review and approve plans. In the review, they found a lack of responsibility being taken at a senior level at some firms. This includes implementation plans being approved without board level discussion, and boards asking ‘just one question’ before approving a plan. One question might be all you need if you’re Columbo – but senior leaders must remain visible, active, and credible to achieve effective implementation. If the Duty is an afterthought at a board meeting, firms risk a trickle-down effect where little impactful change is made.
The four key outcome areas – ‘Products & Services’, ‘Price & Value’, ‘Consumer Understanding’, and ‘Consumer Support’ – are the hearty fillings of the Consumer Duty’s sandwich. Worryingly, the FCA has perceived some firms as being ‘complacent’ in assuming current internal frameworks for assessing these outcome areas will suffice to meet Duty requirements. Others lack clarity around the approach they will take in relation to their communications strategy, which can impact outcomes across the four areas. Our research has consistently shown that customers with mental health problems are at greater risk of poor outcomes. The Duty exists, in part, to solve this problem. Those of us experiencing mental health problems require firms to do better here, and deserve more than complacency and fuzziness.
Data must be monitored and analysed to a very high standard as this helps identify customers at risk, which is crucial in preventing foreseeable harm. The FCA has reported the impression that some firms assume they can ‘get by’ by repackaging existing data to meet Duty requirements. Effective data strategies must be seen as an important opportunity to improve outcomes – such as preventing customers from entering a debt spiral. In some cases, the actions taken as a result of proper data usage can even reduce suicidality.
Embracing the shift to focus on consumer outcomes
I’m sure initially some firms felt like resisting the crashing waves of the Duty, as its various iterations swelled upon their shores. However, the FCA review reveals that in the implementation phase, many firms have chosen to embrace the changing tide and focus on consumer outcomes.
It’s really encouraging to see many of our recommendations relating to consumer understanding and support are included in implementation plans, and highlighted as examples of good practice in the FCA’s review:
- Developing mechanisms for those of us struggling to disclose additional needs or vulnerable circumstances. This is very welcome – disclosure can be a springboard to better understanding and support for customers with mental health problems. Enabling this to happen means greater transparency, empowerment and engagement as customers can potentially get the outcome they need without having to ask.
- Considering how to give customers the information they need, at the right time, presented in a way they can understand to make effective decisions. If firms get this right it will mean customers are less likely to delay taking action because they are equipped to take the next steps. Supportive information minimises distress and maximises help-seeking behaviour meaning customers are less fearful about getting in touch with their bank.
- Committing to providing information to customers using their channel of choice. Making it easy for customers to communicate through their channel of choice without having to channel-shift in a journey is especially important for people with mental health problems. This is because symptoms such as poor concentration, low motivation, and memory problems can result in people exiting if additional steps – such as having to move from webchat to telephone to complete a task – are added in.
Letters are in the post - let’s get to work
The FCA is about to write to firms to highlight its key expectations on implementing the Duty and some of the key risks and consumer harms it is concerned about. We are glad to see the FCA maintaining this momentum. This regulation could have an incredibly positive impact, but we recognise it represents a huge task for firms.
If you’re behind on plans, or wondering how to deliver elements of the Duty, we want to hear from you: whether you have a simple question, or want to work together more formally to benefit from the opportunities of being mental health accessible.
If you would like to find out more about how we can support you to make improvements for people with mental health problems, please contact Rosie at firstname.lastname@example.org.