Call of Duty. How is the Consumer Duty working for you?

Financial Advisory

25 May 2023

Consumer DutyDataFCAFinancial AdvisoryMeeting of MindsVulnerable client

Expert: Ellie Brown, Door Facilitator: Leigh Fisher, Door


  1. The industry broadly supports the message behind Consumer Duty although the concern is that the requirements need to be more consistent in order to effectively analyse, document and address concerns

Discussion points:

Do firms agree that the Consumer Duty directive is needed by the industry and will the results empower the consumer?

Firstly, we identified what Consumer Duty is. Essentially it boils down to the FCA wanting to increase conversation, and evidence findings and actions, between distributors and manufacturers with the aim of ensuring that consumers are getting the best possible outcomes when it comes to their investments.

The attendees broadly agreed that in essence, Consumer Duty is a good thing for clients and several firms have already identified areas that need to be improved upon within their own firms, particularly around vulnerable clients. 

Some firms felt that Consumer Duty is merely an extension of RDR and more recently, assessment of value, and all progress was good for the industry.

There were some concerns about how the work would directly impact the client, and also about whether firms would pass on the additional cost of completing Consumer Duty to the client.

Are firms giving equal consideration to all 4 outcomes as outlined in the directive?
This varied from firm to firm. Smaller firms (or those with fewer funds to consider) are finding it relatively simple to gather all the information they believe they need to address all four outcomes. 

Other firms are largely dependent on existing documents such as EMT 4 and EMT 4.1 which primarily address outcomes 1 and 2, as they believe this is where the focus is. Additionally, they already have processes in place for gathering this information. This was often met with less focus being given to outcomes 3 and 4 around consumer understanding and consumer support.

How difficult is it to analyse the data and what are firms doing with it?
All the firms agreed that evidencing completion, understanding, and actioning are critical, but doing so is not straightforward and there are a multitude of methods being put to work. 

The biggest issue to arise was that the information distributors are receiving from firms varies from firm to firm, meaning that cross-comparison is not easy.

For firms with fewer funds, the gathering and analysis of data has been fairly straightforward, albeit time-consuming. 

For firms with larger volumes of data to gather from a greater number of manufacturers, the process has been, and continues to be, intensive.

So far, analysis has been limited and where it has taken place has largely concentrated on a fund-by-fund level, as opposed to industry or sector trends.

The holistic analysis of data will require more information from manufacturers, which firms anticipate trickling in as we move closer to the July deadline.

When asked what firms were doing with the data they receive back, some of the room were merely filing the data, so that they have complied with the directive but potentially not recognising or actioning any concerns.

Other firms have used the directive to ensure that further training has been given to staff, particularly around vulnerable customers.

Most were in agreement that there should be good outcomes for consumers as a result of this work, however, in practice people were unsure specifically what this would be and how it could be implemented. 

What has been the impact of Consumer Duty on firms overall?
All firms have elected at least one individual to look at Consumer Duty.  Larger firms have working groups in place that are meeting regularly (at least once per week) to discuss Consumer Duty. 

All firms present admitted that issuing / gathering data has been a huge task, with one firm stating thousands of man hours have been spent on the task, bringing back the question as to whether the cost to manufacturers and distributors would ultimately incur greater costs (and worse value) for the end consumer. 

Most firms agreed that there were a lot of grey areas within the directive with a number not wishing to be outliers in the industry by wishing to be seen as gathering just enough data, not too much or too little. One contributor mentioned that as was seen in RDR, Consumer Duty gives firms a chance to be stand-outs in their field.

Overall, there remains confusion about exactly what is required, and what impact this will have but there is support for the directive in terms of all firms wanting to improve the industry and the client experience.

Are firms looking to use external providers to complete Consumer Duty requirements?
This varied from firm to firm. Again, smaller firms, or those with fewer funds to analyse, felt confident in what they had achieved internally. Some firms were unaware that external providers, such as Door, had a Consumer Duty offering that could be utilised.  Some firms are reliant on their external compliance functions completing the work required. 

Key takeaways:

  • The key finding was that with multiple channels, inputs, and outputs from different sources with different views on what is required, firms may end up with a lot of data that is impossible to analyse and therefore impossible to identify and action any areas of concern
  • The unanswered question remains: Is the cost of Consumer Duty to the client worth the value it may bring them?