Consumer Duty: one year on

In launching the Consumer Duty on July 31st 2023, for open products and services, the Financial Conduct Authority (FCA) set out to raise the bar for financial services with what it declared were ‘higher and clearer standards of consumer protection.’ At its heart was the new Consumer Principle, which required firms “to act to deliver good outcomes for retail customers”.  These are a few simple words to say/write, but in action, they are a far more complicated proposition to deliver and evidence without significant process and cultural change for many in the financial services sector.

Ahead of the Consumer Duty launch, MotoNovo completed a significant volume of work to prepare itself and to help its distributor (dealer/broker) network to ensure they understood and were ready for the launch.

A dedicated series of Consumer Duty videos designed for distributors provided an overview of the new regulation's requirements, shared best practices and outlined the crucially important identification and care rules for potentially vulnerable customers.

Closer to launch, our highly trained business development team delivered a very well-received Dealer Readiness Assessment tool, which helped dealers crystalise areas that they needed to focus on to prepare for the initial launch.

I say ‘initial launch’ because it was always clear that for all of us in motor finance, July 31st, 2023, was the start of the Consumer Duty process, not the end. The regulator was clear that it expected compliance with it to be something that would evolve or to quote the FCA’s Nisha Arora in a speech on November 1st, the Consumer Duty was “not once and done.”

While the regulator has recognised that many financial services firms have made great progress on the Duty, in a speech in February, the FCA’s Sheldon Mills noted, “there is still much room for improvement.” Areas of improvement identified by the regulator have included evidencing fair value and good customer outcomes and supporting vulnerable consumers.

The continuing Consumer Duty journey

Undoubtedly, we can all expect further changes in how we operate to fulfil the Consumer Duty requirements across motor finance. As a lender, we must keep improving our products from a price and value perspective. For our dealers and brokers, the need to stay focused on measured customer outcomes cannot be underestimated. Customer reviews alone will not be enough. Broader data insights will be needed to include areas such as product performance data, complaints, customer feedback, and reviews.

At MotoNovo, we remain committed to our partnership principle. We will continue to work side by side with our partners to ensure they understand the evolving regulatory position and share insights and tools to help.

A year on from the launch of the Consumer Duty – FCA webinar

In the spirit of us all being in this together, if F&I is important to your business, I’d encourage the dealer and broker community to join an FCA webinar on July 31st 2024. The live event will enable us to hear first-hand the regulator’s insights and those of the Financial Ombudsman on the Consumer Duty. It will also be possible to raise any questions. The webinar will focus on: 

• The impact the Duty has had in its first year 
• Examples of good practices and areas for improvement 
• The FCA’s priorities for the year ahead 

Click here to register for the webinar.

Debbie McKay, Distribution Director