Firms seek assistance to help meet requirements
The Chartered Insurance Institute (‘CII’) has today (25 September 2024) published a White Paper that seeks to support firms’ compliance with the Financial Conduct Authority’s reporting requirements under the Consumer Duty.
Every regulated firm is required to produce a Board report, at least annually, to record its progress in achieving the customer outcomes set out by the FCA. With the rules having come into effect in July 2023, the first Board reports were due by 31 July 2024.
The CII partnered with FWD Research in July to ask members of the Institute directly involved in Board reporting about the challenges they had encountered in producing these first editions, including finding, reconciling or generating data.
The professional body found many survey respondents would benefit from assistance to better understand the characteristics of vulnerability and identify vulnerable customers. Those who attended the roundtable also said they would welcome advice on storing and sharing information on these customers, given the need to meet other legislative requirements, such as GDPR rules.
While some firms were worried about how much time was being invested in the reporting process, others said it had helped to shape internal conversations that had already driven positive changes for their customers.
Nevertheless, most firms said they would welcome more guidance from the regulator on how they should meet the reporting requirements.
The Institute’s White Paper makes recommendations to help firms better implement the Consumer Duty and in doing so ensure customers benefit optimally from its introduction. It also sets out areas based on the findings that the CII intends to discuss with the wider sector, including with the FCA.
Over the next few months the CII will be introducing solutions to help insurers and brokers better implement the Consumer Duty. The first initiative – with FWD Research – is designed to help members meet the FCA requirement to conduct a top-down survey of their customer base so that they can understand vulnerability and develop informed vulnerable customer strategies.
In his foreword, CII Group Chief Executive, Matthew Hill, said: “The Chartered Insurance Institute sought experiences of writing these initial reports to understand any challenges that might have been encountered, and to make recommendations that might assist other firms in future.
We are sharing our findings and recommendations with the FCA and the wider sector through this White Paper, and we will continue to explore with the regulator and our members what more we can do to assist firms in meeting the standards of care expected from the introduction of the Consumer Duty.”
Areas the CII intends to discuss with the wider sector, including with the FCA:
- How well the Duty is serving the customers originally considered to be in scope, and whether any changes are required as a result.
- How we can collectively support firms to understand the characteristics of vulnerability and identify vulnerable customers.
- Whether we can support the production of more guidance to help firms understand what data they should be storing about vulnerable customers, for how long, and with whom it should be shared.
- Whether we can support the publication of interpretations of the Duty that relate to specific sectors (such as around data principles, good practice or codes) to remove ambiguity, encourage reporting consistency and generate greater sector efficiency.
- Whether we can support the introduction of a core set of metrics against which all firms should be expected to report as a minimum.
The CII’s recommendations to firms are:
- Firms should ensure that data and reporting requirements are used not only to satisfy reporting requirements, but are baked into product, service and process improvement cycles, as well as the design stage for new products, and are used to create the causal chain the FCA has identified as best practice.
- Firms are encouraged to work with professional bodies to develop research best practice, for example on survey methodology and the analysis of unstructured conversations, so that the benefit to consumers is as broad as possible.
- Firms should identify whether they have a robust understanding of vulnerability for their customer base that enables them to develop informed vulnerable customer strategies that will lead to good outcomes for all customers, including those with characteristics of vulnerability.
- Firms should place more emphasis on joining the data dots around individual customers or customer groups in real time, challenging assumptions and exploring data insights across multi-disciplinary teams to effect positive change for them.
- Leadership teams in firms should take active interest in reviewing customer needs for each of their entities, being the voice of the customer, to ensure continuously improving outcomes are prioritised.