What happened?
TCC recently hosted a Consumer Duty forum with leaders from medium to large financial services firms. The event highlighted that while many firms have established basic compliance frameworks, embedding the required cultural shift and maintaining robust corporate governance remains a significant challenge.
Key discussions centered around active board involvement, the role of Consumer Duty Champions, and the integrity of Management Information (MI). Participants noted that some boards still expect solely positive reporting, which can mask critical areas of work-in-progress or required remediation.
Why does it matter?
The FCA’s supervisory focus is shifting from initial implementation to long-term outcome testing. Proportionality under SYSC rules means that smaller firms are not exempt from rigorous evidence generation. To withstand scrutiny, firms must transition from passive complaints-tracking to active qualitative and quantitative monitoring.
Firms are also navigating specific operational challenges, such as ongoing service charges and coordinating product oversight between manufacturers and distributors. Robust, data-led evidence is essential to avoid regulatory intervention.
Who is affected?
This update is highly relevant for non-executive directors, Customer Duty Champions, and Senior Management Function (SMF) holders across wealth management, insurance, banking, and lending firms.
Key risks
- Superficial Board Reporting: Presenting only positive progress to the board, leaving critical operational gaps unaddressed.
- Weak Outsource Monitoring: Insufficient oversight of product governance and customer journeys across distributor-manufacturer boundaries.
- Distorted QA Metrics: Relying on superficial scores, such as call-handling speed, rather than assessing material customer outcomes.
Actions to take
- Record Board Scrutiny: Document active board interrogation of Consumer Duty reports, including requests for deeper risk analysis.
- Upgrade MI Frameworks: Transition from passive complaint counts to qualitative outcome indicators that drive clear business actions.
- Address Service Charges: Establish clear operational protocols for ongoing service reviews, including monitoring behavior risks in system inputs.
- Deploy RegTech Solutions: Invest in technology-driven quality assurance to increase testing volumes and reduce manual compliance burdens.
Wider implications
Supervisory expectations continue to rise across all sectors. Proving long-term compliance is becoming a key differentiator of firm reputation, customer trust, and market competitiveness.
Recommendations
Boards should proactively challenge their current Consumer Duty evidence frameworks and address any indifferent internal cultures before the next reporting cycle.
Supporting sources
Frequently asked questions
What are the common challenges identified in board governance?
Forums revealed a lack of active board involvement, a tendency to report only positive progress, and conflicts when non-executive directors also act as Consumer Duty Champions.
How does proportionality apply to smaller firms?
Proportionality does not mean less work. Smaller and medium firms must still produce robust, auditable evidence of how they deliver and test appropriate outcomes.
What is the recommended approach for Quality Assurance (QA)?
Firms should shift focus away from non-material administrative scores and instead use data and technology to monitor material customer outcomes.
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