The importance of putting consumers at the heart of a business is the well-recognised aim of Consumer Duty. In my last blog, I talked about the FCA repeatedly expressing that firms should be using data to design comprehensive measures that evaluate consumer outcomes.
But what type of data is required to understand outcomes for consumers, including those with characteristics that could lead to vulnerabilities? In order to construct a comprehensive view of the consumer outcome, and an adequate framework to identify potential harms, both qualitative and quantitative data are required. These metrics and insights need to be shared right across the distribution chain to ensure that the right products and services are delivered to the right target markets.
The understanding of the quantitative data points that needs to pass between manufacturers and distributors is now becoming more established within the industry, with the increasing usage of the EMT 4.2 for the manufacturer to distributor information flow, and the Distributor Feedback Template to facilitate distributor feedback to the manufacturers. Having been agreed by the major industry bodies in collaboration with their members, these standards are the best start point to understand the relationship between products and target market.
The regulator has said that it expects firms to develop their data capabilities over time to really understand outcomes and identify harms. In order to contextualise the quantitative data sets available with firms and shared between participants in the distribution chain, a more qualitative data set is required.
To support this aim, TISA has developed, with is members, the Consumer Duty Template, providing this more qualitative view of the product and the provider. This template sits alongside the EMT 4.2, and distributors are likely to find it useful in providing reasonable assurance that the firms they are in a business relationship with are complying with Consumer Duty. It also serves to add clarity to where responsibility lies, such as which party will provide literature if an alternative format is required.
In terms of the Distributor Feedback Framework, there may occasionally be material issues that will need to be reported to the manufacturer in real time. But to the more challenging question. How can firms gain an ongoing awareness beyond the quantitative data, of how the products are really perceived by the consumers, for better or worse? The answer is to ask them.
Most firms’ work to date has been focused on existing metrics rather than measuring the actual results experienced by their clients. Customer feedback is a critical part of the MI that should sit behind the outcomes assessments, and whilst this may be more material for firms with the direct customer relationship, the customer voice should be of critical interest to all participants in the distribution chain.
What better way to demonstrate that in the spirit if the Consumer Duty Principle the customer is truly at the heart of the business.
The Consumer Duty Template is available within TURN as part of the core package that includes EMT 4.2. Look out for exciting developments this Autumn as we bring to market a unique product that disseminates the customer voice throughout the distribution chain, alongside the DFT.
Lisa Laybourn
Head of Risk
