Consumer Duty: Governance and Management Information

Rob Sargent

Rob Sargent

Financial Services Regulatory Senior Manager

Previously, in the first of our Consumer Duty blog series, we set out what matters and what you need to know. Here, we explain the importance of good Management Information (MI) and governance in allowing firms to be able to effectively monitor positive customer outcomes.

How do we make the right decisions, with the right information, at the right time?

We should always challenge ourselves to make sure that we are receiving the right information to make the best, and most informed decisions. And whilst the importance of good MI and governance is nothing new, there will need to be new information, to allow firms to be able to effectively monitor positive customer outcomes. The Financial Conduct Authority (FCA)’s Finalised Guidance, FG22/5, provides detail on the types of data and information that firms could use*. It is critical that firms consider their information holistically, and really understand the underlying reasons for their data.

But more than this, it is important that we consider that governance and MI does not limit itself to the Board and Committees. Do we consider the availability of information, and ability to make decisions, below Board and Committee level?

On top of this, we have identified some key considerations for firms, in relation to what information they collect, what they do with it, and how they make decisions.

Seamless data

Does everyone who might need it have access to the right information? This can be both MI and customer information. For example, if your Lending Team pick up a piece of information on the phone with a customer, can all other departments (arrears management, current accounts etc.) see it? If not, then the wrong decision could be made for a customer, or a customer may be required to repeat potentially distressing information unnecessarily. The “de-silo-ing” of teams, departments, and divisions - especially within large organisations - will be a longer-term cultural and operational challenge, but necessary if we are to truly embrace, manage and embed Consumer Duty. Moreover, it is critical that colleagues are trained on collecting the right information and in the right manner. The juxtaposition of understanding your customers whilst simultaneously ensuring your GDPR compliance means that telephony and customer service staff will need clear and robust training and feedback to ensure they continue to do the right thing and strike the right balance.

Clear MI

We are seeing several stories of Firms collecting a swathe of personal information on their customers, which is then being analysed, collated and funnelled up to seniors in Committee packs. But this is not a good strategy. Not only does this create a potential GDPR breach (not having a good reason for obtaining and holding customer data), but it confuses and depowers the pertinent information that is being presented. Does your MI, Board and Committee packs allow members to see the wood through the trees? What story is your MI telling? What questions is it answering? Thinking about these allows us to focus our minds on what really matters.

Effective scrutiny of data and MI

It is important that we challenge ourselves when considering the underlying reasons behind our data. For example, when considering customer switching, the same information could be interpreted in a variety of ways. Are customers not switching from your product because they are satisfied with it, or because you are making it difficult to switch? Conversely, are they switching because they don’t like your product, or simply because you are acting in customers’ best interests and making switching very straightforward? It is critical that we all look past the initial data and really consider the underlying reasons for the numbers.

Timely decision making

There has always been a challenge between making decisions quickly, and having the right information, and the right people, making those decisions. When considering your governance and decision-making process, does the escalation process make sense? Will the ultimate decision maker understand the subject matter? Does it need to be a Committee decision, or can it be made by individuals? What information do they need to see? Whilst none of these questions are new, they need to be asked in conjunction with the key essay question of the Consumer Duty: are we acting in the best interests of customers? If you could decide quicker, or provide better information to decision makers, then the answer is likely to be no.

All of this culminates in a variety of challenges for Firms. Knowing what information to keep collecting and what information to stop collecting is a challenge. Knowing who needs to decide, and not escalating decisions unnecessarily (and thus slowing the process) is critical. Having the right people analysing and critiquing both the data and the stories behind the data, allows for a more fulsome approach to decision making. And ultimately, proactively demonstrating that your business is always acting with the customer’s best interests at heart.

Get in touch

There is a lot to consider, so if you have any questions, please get in touch with Ewen Fleming, Si Mathavan or myself.

You can find the first blog in our Consumer Duty series, here.

* FG22/5, pages 117-8, paragraphs 11.32-5.

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