As the one-year mark of the Consumer Duty’s implementation approaches, firms are reminded that the first board reports on Consumer Duty implementation and outcomes are due by 31 July 2024. These reports are critical for assessing and evidencing how firms have provided good outcomes for consumers under the Duty.
Importance of board reports
According to the Financial Conduct Authority (FCA), “Board reports are key to assess and evidence how firms have provided good outcomes for consumers under the Duty.” This means that these reports will play a crucial role in demonstrating how firms have aligned their practices with the Consumer Duty requirements.
Lack of specific framework
One of the challenges firms face is the lack of a specific framework or template for these reports. The FCA has provided general guidance but no detailed structure, leaving it to individual firms to determine what is appropriate based on their business model, customer base, products, and services. The FCA has stated:
“Our rules do not set a specific template for the Board report, and it is for individual firms to determine what is appropriate for them. The length and detail of reports will likely depend on the nature and extent of your firm’s business activities and the impact they have on consumer outcomes.”
Essential components of the reports
While the exact content of the reports may vary, the FCA expects firms to include at least the following elements:
- Monitoring results: Assess whether products and services are delivering expected outcomes in line with the Duty.
- Evidence of poor outcomes: Identify any groups of customers receiving worse outcomes, evaluate the impact, and determine the root cause.
- Actions taken: Describe actions taken to address any risks or issues identified.
- Future strategy: Ensure the firm’s future business strategy is consistent with delivering good outcomes under the Duty.
Specific areas to consider
Firms may also consider including detailed reviews in areas such as:
- Consumer Duty policies: Ensure they are fit for purpose.
- Risk assessments: Document actions taken as part of Business Wide Risk Assessments (BWRA) or Enhanced Risk Assessments (EWRA).
- Related policies and procedures: Review policies like Complaints Handling, Vulnerable Customer protocols, and Customer Onboarding processes.
- High-risk products and services: Update on any high-risk products, services, and customer segments.
- Compliance monitoring plans: Output of monitoring activities related to the Duty.
- Training records: Document any Duty-related training.
- Website and financial promotions: Review for compliance.
- Customer complaints and queries: Analyse reviews of web chats, phone calls, etc.
- Key Performance Indicators (KPIs): If available, include relevant KPIs.
No submission requirement
It’s important to note that there is no requirement to submit these reports to the FCA. However, firms should be prepared as the FCA may request them at any point after 31 July.
For more detailed information, visit the FCA’s Consumer Duty information for firms.
How Neopay can help
At Neopay, we understand the complexities and challenges firms face in preparing Consumer Duty board reports, especially given the lack of specific FCA templates and frameworks. Our expertise in compliance and regulatory requirements allows us to offer tailored solutions to help your business effectively document and demonstrate adherence to Consumer Duty principles. From comprehensive compliance audits and workshops to specialised training sessions, we ensure your reports cover all essential components, reflect best practices, and align with the FCA’s expectations.
Let us support you in delivering robust, compliant reports that evidence your commitment to good consumer outcomes. Contact us today to learn more about our services and how we can support your business in maintaining compliance with the Consumer Duty requirements.
