Companies should also be considering what products and services are impacted by the duty, and prioritise the review of communications or journeys that are most at risk of harm to customers.
Through testing and the use of management information, it may become clear that a communication is too technically worded for its target audience and needs to be adapted, or that a product or service does not properly deliver fair value.
This is inconsistent with the consumer understanding and consumer support outcomes, which emphasise that information must be provided to retail customers in a way that they can understand — whether this be verbally or in writing, particularly where customers show characteristics of vulnerability.
Being flexible in delivering communication is critical, so that customers are well informed of their options and are able to make timely and effective financial decisions as a result.
Companies should also have prepared and encouraged staff training, to assist colleagues across various roles to understand the part that they play in implementation. It is important to consider and review MI once training has been delivered, to establish whether outcomes for customers have been improved.
The FCA has also conducted multi-firm reviews, which have primarily focused on the approach that companies have taken to conduct baselining and gap analysis against the duty.
While there are a high number of firms that are confident that they are on track to implement the duty by the July deadline, it is important not to be complacent.
Companies should continue to review progression with their plans for implementation and consider any potential harm to customers where gaps cannot be closed before the deadline.
The FCA has already requested information on the status of any remedial action that firms have identified that needs to be undertaken. If companies are unable to complete any of the changes or actions identified within the required time period, then the watchdog must be notified and an explanation provided.
Due diligence: what should firms be doing?
The FCA is looking to companies to challenge and avoid foreseeable harm to customers, and to try to mitigate harm as quickly and fairly as possible.
The extent to which mitigation is reasonable depends on many factors, including whether a customer is deemed to be vulnerable.
The regulator has placed emphasis on supporting and identifying customers who may have different needs and characteristics, and so it is important for companies to tailor communications where possible to a customer’s needs and understand drivers of harm on a case-by-case basis.
Companies must also be mindful of where their products and services are most likely to cause harm to customers and take steps to ensure fair treatment.
