Seeing the bigger picture: Drawing conclusions from Consumer Duty


Ewen Fleming

Ewen Fleming

London Office Head, and Head of Consulting & Financial Services


Consumer Duty has long felt like a Roman mosaic, with individual elements representing carefully-crafted parts of a much broader story. The breadth of topics covered has already led firms to comprehensively review all aspects of their customers’ journey. Now, the various tiles are starting to slot together and, as they align, a bigger picture is starting to emerge.

But there are many ways to create a mosaic – some more compelling than others. With six months until the final regulatory deadline in July 2024, Executive and Board members need to determine if the picture in their firm demonstrates a clear and authentic focus upon their customers’ interests. Does the evidence base support the firm’s position? The regulation was designed to be challenging, so it is inevitable that Consumer Duty will be an ongoing change, as firms learn and evolve their response and evidence to demonstrate good customer outcomes.  

There are also broader opportunities to realise, well beyond simply complying with the new regulation. Whilst interdependencies between component pieces can be complex, they offer the potential to create a virtuous circle – where a deep knowledge of customer needs enables firms to optimise how they design and execute products and services. Stronger customer relationships and reduced negative friction have commercial benefits too.

What have the main challenges to have emerged?

Across a series of articles, the Johnston Carmichael team has discussed key themes that we consider to be the priority areas for firms to develop ahead of 31st July 2024. Each represents a key challenge, leading firms into a further layer of complexity.

Most firms...

But...

Can article articulate customer needs.Is this granular enough to differentiate between customer cohorts, especially where products have mass appeal?
Articulate pricing relative to competitors and similar products.Does this define ‘fair value’, analyse your cost to provide a product or service, and help you evidence why pricing (and profit) is an equitable balance of customers’ and firm’s interests?
Have a base level of data to monitor outcomes.Are these the right, granular metrics to assess new layers of complexity and manage outcomes?  Do they demonstrate action taken and provide evidence of results?
Approve communications for compliance (often financial promotions).Do enhanced capabilities tailor communications to specific cohort needs, supporting comprehension?  How do customers act in response, and do you track this?
Identify and address vulnerability where disclosed.As well as disclosed, what vulnerability can you proactively infer from data held?  How do vulnerable customers directly influence your product and service design?
Measure colleague engagement with strategic priorities.How do you probe beyond surface indicators to assess ‘hidden’ culture and evidence authentic support for the customers’ interests?

How should firms be responding?

Taking stock of what we have learned so far, three themes should guide your approach.

  1. Learn and grow – Nisha Arora’s speech in November 2023 signposted that both industry and regulator are at the beginning of a journey, with more to learn.  Firms should identify areas they want to explore further, be clear on what they don’t yet know, and define plans to satisfy their curiosity by developing knowledge further.
  2. Good governance – Whether measuring outcomes or surfacing customer feedback, firms should actively seek out challenge.  External perspectives and different voices can materially improve outcomes and provide valuable assurance. Similarly, the Board report due July 2024 reflects an opportunity to reflect, critically-assess performance, and identify ongoing priorities.  Being open and honest is central to demonstrating an authentic customer-focused culture.
  3. Think like a customer – Our experience, technical knowledge, and functional specialisms can make us an inherently-complex industry.  We must better empathise with how customers understand our products and services.  The challenge is to design, communicate, and operate in a way that reflects what our customers expect.

As we edge towards July 2024, the final regulatory deadline feels more like the end of the beginning. As the mosaic takes shape, the bigger picture is coming into focus – but this also highlights those areas where greater definition is required!

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 me  – or another member of our team  – if you would like to explore how support could be tailored to your requirements and budget.


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