Firms must embrace ‘cultural change’ to meet Consumer Duty requirements – FCA’s Graeme Reynolds

No comments

Cultural change is important when it comes to the regulation because ’the duty is not a once-and-done exercise’, says director of competition

Complying with the Consumer Duty primarily involves “cultural change” – and ensuring that culture is set up correctly when it comes to firms implementing the duty.

FCA Compliance

Read: Firms ‘still have work to do’ to improve service a year on from Consumer Duty

Read: ‘Many firms need to make improvements’ as FCA publishes Consumer Duty outcomes review

Not subscribed? Become a subscriber and access our premium content

Explore more regulation-related content here or discover other news stories here

That was according to Graeme Reynolds, director of competition at the FCA, who addressed delegates at the keynote session of the Chartered Insurance Institute’s Shaping the future, trends, tech and talent conference yesterday (2 October 2024).

Reynolds explained: “Cultural change has the biggest impact, where professionals don’t just see compliance with the duty as a tick box exercise to follow certain processes.

“Instead, [firms should be] focused on fostering and contributing to a culture where consumers are at the heart of everything [the] firm does.”

He noted that cultural change was vital when it comes to the Consumer Duty because “the duty is not a once-and-done exercise”.

He added: “It should become an integral part of how firms do business on an ongoing basis, continuously striving for improvement and being proactive in identifying and addressing issues customers are facing.”

Key steps

The Consumer Duty rules came into force in July 2023 and set out requirements that firms must follow to deliver good outcomes for their customers.

Read: How is the industry faring six months on from Consumer Duty implementation?

Read: Biba calls for removal of larger commercial customers from scope of Consumer Duty

Explore more regulation-related content here or discover other news stories here

Reynolds noted that the cultural change required for firms to meet the duty centred on two key elements – placing the customer at the heart of a company’s approach and aligning internal structures.

He explained: “To meet this, some firms have changed their purpose and values to align much more with the duty.

“We’ve seen firms updating [internal] structures to ensure that incentivisation is in line with the aims of the duty, or altering their company purpose to send a clear signal to all staff that they need to focus on good customer outcomes.

“Steps like this should have a tangible impact on culture and staff behaviour.

“Others have implemented a data-led approach. Insights from this data can help to truly understand the details of customers’ experiences and drive improvements in the way the firm conducts its business.

“The benefits we want to see from the duty will only be delivered by firms making lasting changes to their culture, behaviour and processes.”