All firms are expected to complete an annual consumer duty board report.  The report serves as a comprehensive overview of the firm’s adherence to the Consumer Duty and is proportional based on business size and risk, with large firms requiring more in-depth reports compared with typically a 1-2 page report for a small broker with lower risks. 

During the last 12 months since the inception of the Consumer Duty in July 2023 you should have been monitoring the business based on good consumer outcomes.  This monitoring can take several forms, but usually includes management information reports, business register records, complaints and customer feedback as well as any audit records. 

A gap analysis audit should have been completed prior to July 2023 to identify shortfalls which need addressing.  If you haven’t done this you should complete one as it’s better to fix any issues now than assume all is well.  We have a detailed full business gap analysis tool available covering the Consumer Duty requirements; please contact us for more details and a copy. 

You should monitor outcomes on a regular basis, based on the products you distribute, communication you have and support you give.  This monitoring should determine if you have sold products that have met the customers’ needs and objectives.  That these products have provided fair value with action taken if they haven’t.  Provided customers with the right information to make informed decisions and supported the customer throughout.

The FCA has said they intend to carry out a check on a random selection of firms and will be requesting a copy of the firm’s annual report.  So it’s important you have completed one by the end of July 2024. 

When completing the report, you should follow a structured approach to ensure compliance with regulatory expectations noted above. The report should cover various aspects related to the Consumer Duty, including how the firm identifies and supports vulnerable customers, its approach to fair treatment, and any actions taken to address shortcomings.

The Report

The easiest way for small firms to approach the report is to split it down into the following recommended headings, at all times reviewing data held and how this evidences good consumer outcomes or areas which could be improved: 

Summary - An overview of what action was taken following an audit, what the firm has implemented during the twelve months to ensure good consumer outcomes and the sources of data captured and used to review the business and create the report.

Products & Service – Review of the service offered, service levels, market share.  Have you changed your service, products or even third party providers used in light of data captured to improve consumer outcomes?  Data on customer referrals and recommendations – a sign consumers have been happy with the service if they have made recommendations to others.  Also review any complaints data as well as customer feedback covering the service offered.

Price & Value – A fair value assessment should have been completed prior to the Consumer Duty starting last year.  Does your business offer fair value to consumers?  Has this changed during the twelve months?  Look at data collected, such as customer feedback and comment on how you have established if the business continues to represent fair value for consumers. If not what new action will be taken to ensure going forward the business offers consumers good value.  Include any data if you refer a customer to a 3^rd party provider and conformation this still represents good value.

Customer Understanding – This relates to the quality and clarity of the information that’s provided to a consumer.  Have you changed the documents you issue during the 12 months, what if any improvements have been made, or issues identified?  Do you establish customer understanding and how is this recorded.  Usually customer feedback regarding understanding is the best source of data. 

Customer Support - Support can involve everything from ensuring the customer is provided with information requested in a timely manner, availability of advisers and staff when customers call, following up on any service discussed and so on.  Vulnerability is the one area of customer support, include data on vulnerable customers and if any changes to the way you provide support to ensure vulnerable customers receive good outcomes. 

Action Plan – In this section you should add any additional action identified, when and how any changes will take place.

Finally the report should be reviewd signed and dated.

If you require further support or a business Gap Analysis Tool , please drop us an email at info@h3consultancy.co.uk