Editor's note: This brief was summarised by The Property AI Team from a report by Mortgage Strategy. Read the original article for full details.
Consumer Duty Marks Three Years with Focus on Customer Vulnerability
Three years after its introduction, Consumer Duty is moving from an implementation phase to a period of maturity, with a growing emphasis on how firms deliver good customer outcomes. Regulatory expectations are becoming clearer, and scrutiny is increasing, particularly around the management of customer vulnerability.
Recent developments have clarified that firms can collect and share customer vulnerability data without breaching data protection laws. A joint statement from the Information Commissioner's Office (ICO) and the Financial Conduct Authority (FCA) confirmed this, encouraging firms to actively share such data to support positive outcomes. Guidance from the Chartered Insurance Institute (CII) has further outlined practical steps for firms to manage customer vulnerability, including recommendations for IT systems, processes, and data infrastructure.
A key message from regulators is the need for proactive identification of vulnerable customers, rather than relying solely on customers to disclose their circumstances. The FCA expects firms to go beyond reactive measures and to understand the full extent of vulnerabilities within their customer base, as well as the outcomes these customers experience.
The next phase of Consumer Duty is characterised by a demand for evidence. There has been an increase in whistleblowing reports related to Consumer Duty, indicating that accountability is now shared across the distribution chain. Firms are expected to demonstrate how they measure success, identify poor outcomes, and use management information to improve customer experiences. The FCA's recent review into outcomes monitoring reinforces the need for firms to act on the data they collect, rather than simply gathering information.
For UK letting agents and inventory clerks, these developments highlight the importance of robust processes and technology to identify and support vulnerable customers, as well as the need to provide clear evidence of good outcomes in line with regulatory expectations.
Source: Mortgage Strategy