Consumer Duty has already resulted in a significant change programme for many firms, requiring a full review of all products and services along with resulting work to prevent foreseeable harm.  With six months until the final implementation deadline of July 2024, the finishing line appears to be close.

However, the regulator’s message is clear – Consumer Duty is not a “once and done exercise” and firms should be “learning and improving continuously”.  Acting in the customers’ best interests, ensuring fair value, and delivering good customer outcomes should be an ongoing driver of change.

The extent to which firms have truly integrated their customers’ interests into their change planning will become clear over time.  Will the pursuit of good outcomes exert a real influence on firms’ strategy and investment decisions? 

One thing is certain.  Embedding the spirit of Consumer Duty requires a clear commitment to continuous improvement.

How does Continuous improvement relate to Consumer Duty?

Many firms have already initiated numerous changes to meet the new regulation.  Indeed, by seeking to measure and manage outcomes, the most customer-centric firms have recognised an opportunity to act, track impact, and continuously improve what they offer customers.  That ongoing improvement is well-aligned to the cultural shift envisaged by Consumer Duty. 

Yet the industry needs to do more.  As a minimum, there is a clear need to remove any potential for foreseeable harm from the end-to-end customer journey – tackling those policies, practices and processes that could work against the customers’ best interests.

More broadly, a firm’s ability to critically assess its products, services, and journeys – informed by a deep understanding of its customers’ needs – will surface valuable opportunities to leverage strengths and deliver improvements.

Why is this important?

Inevitably, demand for investment arises from multiple directions and varies considerably in scale – long-term infrastructure projects, small-scale local change, strategic drivers, commercial plans, remediation activities, legal and regulatory changes, mergers and acquisitions, etc.  Whether mandatory or discretionary, the prioritisation process is often involved and fraught.    

With finite resources available and a volatile operating environment (from pandemic to cost of living crisis), many firms have understandably focused on the most impactful strategic levers – including digitalisation, automation, efficiency, cost: income.

Consumer Duty won’t alter those imperatives but customers’ interests must be meaningfully considered when agreeing priorities.  It is an obligation that lasts well beyond the final regulatory deadline in July 2024 and will introduce some complexity – e.g. ascribing a financial value and making comparisons between competing demands. 

But there are also benefits.  If firms approach priorities holistically, rather than as separate initiatives, Consumer Duty could surface a sweet spot – an opportunity to pursue these goals and improve customer outcomes.  Understanding how to positively impact customers – how to better meet their needs – can ultimately improve commercial returns, growth and efficiency.

What should firms be doing?

Embracing continuous improvement in a Consumer Duty world suggests this five-point checklist.

• A customer voice within prioritisation – Ensuring good outcomes and foreseeable customer harm become an explicit input to your change prioritisation, with similar standing to other commercial and operational lenses.
• Quantifying customer impact – Accessing data to identify and measure customer impact within a business case, ascribing a financial value to delivered benefits as justification of costs incurred.
• Flexibility in delivery – Achieving an appropriate balance between the use of agile, low-tech deliverables that quickly remediate a problem with more structured, strategic shifts that take longer to realise.
• Considering third parties – Strengthening your ability to influence the performance of (and dependencies upon) third party suppliers, especially where they impact customers within a wider journey. 
• A supportive culture – Welcoming evaluation and constructive challenge as a means to surface underlying root causes and drive continuous improvement.

Want to learn more?  We can help

Johnston Carmichael has supported a diverse range of financial services organisations with their implementation of Consumer Duty. Our work has included project implementation, complex change delivery, strategy development, change governance, assurance, learning, and Board/Exco engagement. We also enjoy our close, ongoing links with a range of industry experts, trade associations, and regulatory bodies.

Please get in touch with Simon Cavell, our team, or partner – Ewen Fleming – if you would like to explore how support could be tailored to your requirements and budget.