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With the implementation plans submitted, initial feedback provided, and sector specific guidance letters issued by the FCA - firms are now scrambling to meet the new Consumer Duty [the Duty] rules by the deadline of 31st July ’23.

Will all of this be done by then? The answer is a reverberating no. And the scale of work is the least of the reasons.

It is because complying with the Duty rules is not a point in time exercise, it is a process which has only just begun. As Sheldon Mills ( Executive Director – Consumers and Competition, the FCA ) points out in his recent speech: The frog’s been eaten by many  (i.e. the most difficult but important task accomplished) . Or at least a leg devoured. Rest of it should be relatively easy but by no means over.

The initial review and assessment of the Duty to get to the implementation plan was the hardest and the most important part of the process - referred to as ‘eating the frog’. The aim of this exercise was to get firms to align with the mindset of the Duty and to start thinking about things that need to change.

But ‘real change’ is only about to begin and will continue much beyond the deadline.

Whilst the scale and the nature of change will be unique to each, we believe firms will need to think about the operating model that will support these changes going forward. And in doing so, they will need to consider the following three dimensions from a ‘Duty’ perspective -

1. Generating fair value for their customers throughout the product/service lifecycle

Fair value is more than just the price. It involves consideration of value over time, including when customers are in financial difficulty, or financially challenged to meet the demands of increased cost of living.

Therefore, firms need to invest in changes/business models that make real impact for their customers, and in ways suited for their circumstances and needs.  E.g., making sure customers are notified well in advance when they are coming off a rate, treating customers with respect and care when dealing with recovery and enforcement processes, getting rid of sludge practices such as high exit fees, or unethical processes such as offering a higher rate of interest only to lock in new customers but reverting to less attractive rates soon after etc.

Furthermore, the onus of generating fair value is a collective one involving all the parties in the distribution chain – so sharing information with distributors, wholesalers, retailers, other third parties will be crucial (deadline: 30th April ’23) to ensure good customer outcomes throughout the product/service lifecycle.

2. Testing and monitoring outcomes continuously

The Duty requires firms to assess, test, understand and evidence the outcomes their customers are receiving. Without this, it will be impossible for firms to know if their products and services are performing as they and their customers would have expected.

To achieve this and set the tone for effective testing and monitoring, firms will need to identify foreseeable harm right at the outset, understand existing data sets and set appropriate risk appetite metrics.

Furthermore, within their testing and monitoring methodology, firms will need to ensure there is sufficient coverage of inherent risks of foreseeable harm(s) in the relevant aspects of the journey to corroborate their intent of delivering good customer outcomes.

3. Using testing and monitoring outcomes for continuous improvement

Finally, firms will need to start using the testing and monitoring results for making product, service, process, systems and data improvements, as necessary, to make them viable for delivering good customer outcomes as part of their business model.

The shift in mindset between ‘outdoing last year’s financial performance’ to ‘outdoing the value/good outcomes delivered for the customer’ is huge. But when achieved, this could prove to be immensely rewarding for all parties involved, expressed as, good outcomes for customers, improved customer loyalty for firms and increased trust in the financial services industry, in general.

In conclusion, as Mills pointed out in his speech, firms surely need to “…embrace that frog…it may just turn into a prince”!


Ellora Roy

Senior Manager, Banking and Financial Services, Consulting UK&I, Cognizant

Ellora Roy





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