Our Chief Marketing Officer Sarah Lyons gives her thoughts on Consumer Duty, and the impact it could have on the financial services sector.
Consumer Duty is a hot topic at the moment, and something you’ve no doubt read about in communications, heard debated at industry events and discussed with colleagues. The intentions are clearly positive, driven by the overarching principle that a firm must act to deliver good outcomes for retail clients. Many firms will believe they already do this (and they probably do) – our renowned service quality builds a strong case for Parmenion. So what’s the impact of Consumer Duty for us?
Despite best efforts from many participants in our sector, consumer trust is generally low in financial services. The FCA is seeking to build increased trust, which can only be a good thing. Their tone suggests to me that although principles-based regulation is nothing new, the outcome focus signals a new era for the regulator.
There are many examples where the sector has accused the FCA of reacting slowly to poor customer experiences, e.g. the Mini-bonds scandal, Woodford, PPI and British Steel. These examples of poor practice impact those firms working hard to do the right thing, as customers are reluctant to properly engage with the sector.
So, might Consumer Duty be a good thing for everyone? Imagine the scenario where the FCA is given the powers to be more fleet of foot in challenging regulated firms to demonstrate how they acted in the retail clients’ best interest, rather than the regulator having to prove they’ve done something wrong.
Cynics may say it allows the regulator to apply the benefit of hindsight to its decisions, and many understandably fear the prospect of retrospective action. But, if we all ACT to deliver good outcomes, these outcomes will be delivered.
And that’s the point of Consumer Duty. We’ll already have processes, procedures, governance and training in place to make sure we do the right thing by our clients. The main gaps are evidencing the outcome of these good practices, as I suspect many firms will be measuring the success rather than the impact.
At Parmenion, we’ll be investing in our data service Vantage to make sure we help you with your new Consumer Duty obligations. Measuring the outcomes of our business, products, services and processes will be our collective challenge. Because, ultimately, we get what we measure, don’t we?
Perhaps what you measure is what you get. More likely, what you measure is all you’ll get. What you don’t (or can’t) measure is lost.
H. Thomas Johnson
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity.
Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.