The Chartered Insurance Institute (CII) has published a White Paper outlining recommendations for firms to comply with the Financial Conduct Authority’s (FCA) reporting requirements under the Consumer Duty.
The paper, released today, aims to provide guidance to regulated firms on producing the board reports mandated by the FCA, which must be submitted annually to track progress in delivering required customer outcomes. The first of these reports was due by July 31, 2024, following the introduction of the Consumer Duty in July 2023.
The CII collaborated with FWD Research in July to survey its members who are directly involved in preparing board reports. The survey explored challenges firms faced in compiling these reports, including difficulties in locating, reconciling, or generating relevant data.
The findings revealed that many respondents sought more support in understanding customer vulnerability and identifying vulnerable customers. Respondents also highlighted the need for advice on how to store and share information about vulnerable customers in compliance with GDPR regulations.
While some firms expressed concerns about the time required to complete the reporting process, others noted that it had initiated beneficial internal discussions that led to improvements for their customers. However, most firms indicated that they would welcome additional guidance from the FCA on how best to meet the reporting requirements.
The White Paper includes recommendations aimed at helping firms more effectively implement the Consumer Duty, ensuring that customers benefit from its introduction. It also identifies several areas for further discussion with the broader industry and the FCA, including how the Duty is impacting the intended customer base and what adjustments may be needed.
In the coming months, the CII plans to introduce initiatives to support insurers and brokers in implementing the Consumer Duty. The first initiative, developed with FWD Research, will assist members in conducting customer surveys to better understand vulnerability and develop strategies tailored to vulnerable customers.
In the foreword to the White Paper, Matthew Hill (pictured above), CII Group chief executive, stated that the Institute gathered feedback from firms to identify challenges in writing the initial board reports.
“We are sharing our findings and recommendations with the FCA and the wider sector through this White Paper, and we will continue to explore with the regulator and our members what more we can do to assist firms in meeting the standards of care expected from the introduction of the Consumer Duty,” Hill said.
Key topics the CII intends to discuss with the sector and the FCA include whether the Duty is serving the intended customers, how firms can better understand vulnerability, and whether additional guidance is needed on data management related to vulnerable customers.
The CII also plans to explore the development of a set of core metrics for reporting, which could standardise expectations across firms and improve sector efficiency.
The White Paper also outlines several recommendations for firms. These include ensuring that data and reporting processes are integrated into product and service improvements, working with professional bodies to develop best practices in research, and improving real-time data analysis to drive positive outcomes for customers.
Additionally, leadership teams are encouraged to actively review customer needs and act as advocates for the customer to ensure that continuously improving outcomes remain a priority.
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