Tara Foley: Consumer Duty is ‘not a one and done’ regulation

The FCA’s Consumer Duty regulation, which came into force from July 2023, “is not a one and done” rule implementation – rather, insurance firms will “need to continue to evolve and embed” the regulation’s principles, according to Tara Foley, chief executive of Axa UK and Ireland.

Hot on the heels of the FCA’s pricing reform in 2022, which introduced the ethos of fair value into financial services regulation, the regulator introduced Consumer Duty last summer to set higher and clearer standards of customer protection.

The outcomes focused rules require firms to measure, analyse and benchmark their performance across a number of metrics designed to bolster service – these include products and services, fair value, consumer understanding and consumer support.

Speaking exclusively to Insurance Times, Foley noted that although Axa UK and Ireland “completely [agreed with] anything that’s going to produce a better consumer outcome”, actioning Consumer Duty within the business required “quite a lot of effort”.

She said: “Consumer Duty, let us be very clear, has required significant effort and focus.

“For me, Consumer Duty is not a one and done [regulation].

“We will get feedback from the regulator in July [2024. It will] give some responses around what good maybe looks like.

“My feeling is that we’re in the pack [in terms of what good looks like], but we need to continue to evolve and embed and we will remain focused on it for the foreseeable future.”

All about interpretation

Some industry commentators that Insurance Times has spoken to have taken umbrage with the fact that the FCA’s fair value mantra and now Consumer Duty are not more prescriptive, with the regulations’ implementation relying heavily on individual firms’ interpretation.

For example, Catherine Carey – head of marketing at Consumer Intelligence – told Insurance Times in March 2023 that “the guidance was so woolly from the regulator” and “that there wasn’t enough explanation”.

She continued: “The risk there is you had different businesses approaching it in completely different ways.”

Foley agreed that the insurance sector has “a regulatory environment that is a bit more open”.

She added: “[The regulation is] not that explicit in terms of defining what’s meant. There’s some degree of interpretation required.”

To tackle this, “it’s important to leverage your peer network and for brokers and insurers to talk together to make sure that we’re learning from each other”, Foley said.

“We’ll take a view on what we think the standards [refer to] and it’s good to make sure that we’re aligned across the industry and that we’re meeting the required regulatory standards,” she noted.

Despite the potential for mismatched industry interpretations, Foley believes “regulatory environments across the globe have gotten more robust” following the UK’s banking crisis in 2007 and 2008.

“I know there’s lots of different opinions about what regulation does or does not do,” she said. “We’re supportive of regulatory interventions that produce better outcomes for the customers.”