"In reality, the end of July isn’t a finish line. Instead, it should be seen as the firing of a starting pistol, marking the beginning of a broader conversation and understanding on vulnerability."
Consumer Duty is just weeks away. Years in the making, and with the deadline now looming, there are plenty of firms that will see these final few weeks as the last big push to get ready.
So the big question, it would seem, is how many will succeed? How many, on 31st July, will be able to honestly say that there is nothing they more could possibly do to support each vulnerable customer they serve?
The honest answer, I expect, is this: Not many.
Of course, there will be firms that simply aren’t in the running. Those that haven’t taken the guidance seriously and urgently need to step up. But the reality is that even the best will fall somewhere short. There will be few – if any – in a position to genuinely support their vulnerable customers as Consumer Duty might ultimately like.
If we take it at face value, this seems a fairly bleak prediction. But if we interrogate it a little further, we’ll see that it doesn’t need to be. The trap many firms are falling into is viewing the 31st July as a finish line. They’re operating under the assumption that if they can put the required measures in place now, they’ll be able tick customer vulnerability off their do-do lists and move on.
In reality, the end of July isn’t a finish line. Instead, it should be seen as the firing of a starting pistol, marking the beginning of a broader conversation and understanding on vulnerability.
What is the FCA expecting?
It’s important to remember that, just like many of the firms rushing to put Consumer Duty plans in place, the FCA is also new to monitoring vulnerability outcomes. And while those who do nothing will certainly face repercussions, the purpose of Consumer Duty isn’t to punish firms that fall short. What the FCA wants is for vulnerability to be taken seriously, in a way that one could argue it previously hasn’t. The regulator wants to see that the foundations are in place, ready for us to build on as we develop our understanding.
This idea of development is crucial, when trying to determine where we go next with Consumer Duty. The entire point is that supporting vulnerable customers is something we’ll work on and improve at over time. So what the FCA wants to see on 31st July isn’t necessarily that everyone has every single base undeniably covered. What it really wants is to see that we’re all in the race.
What do we do next?
If Consumer Duty is really about continuous improvement, then once the 31st July has passed the goal should be for firms to look at the measures they’ve put in place so far and ask how they can go a step further.
For some, providing staff with vulnerability training might seem like the most logical way forward. But while training is certainly important, it isn’t everything. In reality, identifying the most valuable improvements requires a process of implement, test, refine and learn. We need to assess the data gathered so far and interrogate it for ways we can improve going forward.
If this sounds daunting, the best place to start is with your own data. Even with purely internal data, you’ll be able to see what’s missing and refine. However, those who are most successful in their development will also have an external view. So many firms are new to this process of collecting vulnerability data. If there are thousands trying to solve the same problem, and to make the same improvements, it makes all the sense in the world to look at other firms – even other industries – and try to benefit from their learnings.
What does the future hold?
While some might have been looking forward to putting Consumer Duty behind them this summer, the reality is that the topic of vulnerability is here to stay. Over time, as we develop our understanding, the outcomes we deliver for vulnerable customers will start to gradually improve. But we shouldn’t expect an overnight transformation. We’ll be in escalation for years.
For those looking to make the most of the data available – whether it’s their or own from across the industry – a third-party specialist with a technology-driven assessment tool can help to accelerate the process, removing bias and subjectivity from the process, and ensuring consistency across a whole client base. By combining clinical expertise with hard data, they’re able to reassure firms that their systems and controls are affecting the change the regulator is looking for.
In the long run, this process will benefit everyone; clients and firms alike. If you’re struggling, or if you know that you need to bring in additional expertise, don’t delay.
