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

The FCA has published the results of a multi-firm review it undertook in December 2023 to examine the progress of the insurance sector’s compliance with the Consumer Duty. 

Its findings showed that “many firms need to make improvements in their monitoring to enable them to determine whether they are delivering good outcomes for retail customers” as specified in the Consumer Duty.

However, it added that it had found a “wide variety” in the quality of responses from firms, including a number of good and poor practices. 

The survey asked for the most recent board or committee reporting from 20 larger insurance firms and asked them to demonstrate how they were monitoring, assessing and testing the outcomes consumers were receiving, along with what actions had been taken after identifying poor outcomes. 

Smaller firms were not surveyed and the FCA specified that proportionality rules meant that it expected these firms to take a different approach while “applying a commensurate level of resource with simpler governance”. 

Some firms were found to be overly focused on processes being completed rather than on outcomes delivered, while others had limited insight into customer outcomes because of a lack of analysis around – or insufficient levels of – data. 

The FCA added that few firms had been able to provide clear evidence of where monitoring outcomes had led directly to action around improving these outcomes. 

The Consumer Duty came into play on 31 July 2023 and requires firms to measure, analyse and benchmark their performance across a number of metrics to bolster service.

Next steps

After detailing its findings under headings of good and poor practice, the FCA added a reminder that all insurers, intermediaries and outsourced service providers operating within the sector should consider the conclusions of this survey.

Particularly, it explained that these results should be examined with reference to the upcoming 31 July 2024 deadline for closed prodcuts and could be used to inform the production of Consumer Duty annual reports, which are due on the same date. 

It added: “Firms that identify gaps in their compliance with our rules should act immediately, putting robust plans in place to address any shortcomings.”