The FCA has published the details of a multi-firm review it carried out in December 2023 amongst twenty large insurance firms, including general insurers, life insurers, insurance intermediaries and regulated third-party outsourcers which service insurers. In addition to the new web page, the FCA has added commentary about annual board reports to its Consumer Duty information for firms web page.
Firms must regularly assess, test, understand and evidence the outcomes their customers are receiving. This will enable firms to meet the requirements set out in the Duty. Firms that identify gaps in their compliance with FCA rules should act immediately, putting robust plans in place.
The FCA saw a wide variety in the quality of responses by firms, including several good and poor practices, which are set out in the report. Some showed good progress in developing a clear and comprehensive firm-wide approach to monitoring customer outcomes, where:
- Clearly defined customer outcomes are supported by;
- A suite of metrics chosen to monitor those outcomes, which allows;
- Identification of poor or potentially poor outcomes, which enables:
- Investigation and, where needed, actions to be taken, which leads to;
- Evaluation of customer outcomes using targeted metrics.
However, some of the firms in the review need to make improvements in their monitoring to enable them to determine whether they are delivering good outcomes for retail customers, as required by the Duty. Some approaches were overly focused on processes being completed rather than on outcomes delivered, and some board or committee reporting contained limited insight into actual customer outcomes.
Few firms were able to provide clear evidence of where the monitoring of outcomes had directly led to proactive action being taken to improve these outcomes, where necessary. While inadequate monitoring itself would not necessarily result in poor customer outcomes, monitoring is essential for firms to identify and remediate them.