Data and Monitoring

What The FCA Says

“A key part of the Duty is that firms assess, test, understand and are able to evidence the outcomes their customers are receiving. Without this, it will be impossible for firms to know that their products and services are working as they and their customers would have expected and in a way that is consistent with the Duty.”

FCA Expectations and What This Means For You

You will need to identify relevant sources of data to enable you to assess whether the outcomes that your customers are experiencing are consistent with your obligations under Consumer Duty. This data will need to be collected, reviewed and where necessary, be acted on to ensure good customer outcomes. 

This will serve as evidence of your monitoring and assessment of these outcomes and any resulting action, on request from the FCA. 

Possible Data to Use

Types of information you may want to collect include - 

• Business persistence: analysis of customer retention records – e.g. claims and cancellation rates and details of why customers leave. This may flag where poor treatment is contributing to high customer turnover.

• Distribution of products/pricing and fees and charges: review of whether certain groups of customers are more likely to buy certain products, incur particular fees and charges, or appear to be receiving outcomes that are not as good as other groups of customers.

• Behavioural insights: customer interactions and drop off rates; use of different communications channels including digital; consumer testing of user interfaces and design such as websites and apps, and the results of such testing. This may flag where firms need to improve policies, processes and systems (e.g. where there are barriers to consumer engagement or understanding).

• Training and competence records: analysis of records of staff training, including remedial actions where staff knowledge or actions were found to be below expectations.

• File reviews: reviewing customer files and monitoring calls to check for errors and assess if customers received good outcomes (this is particularly useful for sales processes).

• Customer feedback: using formal and informal feedback from customers to identify trends and areas for improvement (e.g. complaints and comments made to the firm but also comments and complaints on social media).

• Numbers of complaints: trends in numbers of complaints involving poor customer outcomes throughout the customer-firm relationship

• Complaints root cause analysis: investigating complaints fully to understand the cause of customer complaints, not just dealing with the symptoms.

• Results of the regular testing and monitoring required under the outcome rules: many of the four outcomes rules include requirements for firms to monitor and review over time. The results of these reviews, together with any action taken would be relevant for consideration of whether the outcomes are being followed.

• Feedback from other parties in the distribution chain such as manufacturers and distributors sharing information about the way in which products are sold, and the extent to which actual sales matched the target market.

• Compliance reports: review compliance reports to check if standards are being met in terms of good outcomes for consumers.

• Researching or testing customer experiences through processes such as mystery shopping, auditing customer journeys, focus groups and deep dives, or working with consumer organisations to gain insight into the needs and experiences of consumers.

• Allowing staff to feed back honestly when they think products or services, or the processes used to deliver them, could be improved.

• Reviewing whether processes and policies are effective in delivering good outcomes for customers.

• Drawing on external sources of data about consumer outcomes. The Financial Lives survey, for example, contains granular data about the financial lives of different groups.