We have all heard the cliches about the Consumer Duty. “It’s not a once and done exercise” and it requires a “permanent shift in culture”. We have also heard that the Duty must be truly embedded in a firm’s culture, policies and processes such that the customer remains at the heart of everything that the firm does.
These are laudable aims, but how does one achieve them? Through Senior Management sponsorship, objectives and incentivisation? Of course, but it’s also crucially important to use effective training to ensure that the Duty is truly embedded.
In one important piece of feedback on firms’ implementation plans from the FCA in 2023, they stated good practice to be “a clear training approach to ensure all staff understand their responsibilities under the Duty”, as well as “different approaches were proposed to engage staff, including all-staff and role-tailored training, internal communications campaigns and awareness-raising through company town hall meetings.” The FCA also praised “interactive training on the Duty to the Board”.
The FCA have seen firms adopting some excellent training practices, so this article summarises what we see as best practice in the Who, the What and the How.
First, as far as the Who is concerned, it’s always worth starting at the top. The Board and Senior Management were provided with training before the outset and prior to the development and approval of the first Board report. Best practice now is to supplement that with an outline of current developments in implementation, updated FCA requirements and more detail on the FCA’s expectations for a highly data-led approach to reporting. The FCA has been positive in its attempts to articulate good and poor practices and Boards need to be made aware of these.
Secondly, with regard to staff with direct or indirect impact on customer outcomes (yes, don’t neglect operational, support and control staff who might not be directly customer-facing), we are now seeing a deeper dive into each of the four outcomes a year on from implementation. Best practice and FCA pronouncements have provided greater insight into how to approach each outcome, even if certain of them – price and value, for example – remain a challenge.
In terms of the What, it is important to understand that the Duty is an umbrella for so many regulatory requirements. For it to be truly embedded in the culture and values of the firm, it needs to start at the top, both in terms of the Board and Senior Management, but also in terms of issues. The FCA’s Finalised Guidance back in 2022 asked questions about firms’ purpose, mission and values. Given that the FCA is increasingly approaching staff in firms and asking them direct questions (often with little or no warning), it is very important that those staff can evidence that the Duty is properly embedded. Staff can do this by being able to explain the firm’s purpose, mission and values and also how these translate into implementation of the Duty by those staff in the context of their own responsibilities. This, of course, is where relevant and highly tailored case studies are not just useful, but truly essential. Indeed, feedback from the FCA has stated that they see in-person or virtual training with interactive case studies relevant to job roles as being good practice.
It is also important to consider the How. Staff in financial services are always busy, so training needs to be relevant, concise and, dare we say it, enjoyable. It also needs to be varied, so we have seen firms adopting a blended approach to Consumer Duty training, including both in person training (particularly for the Board, Senior Management and staff with direct customer contact) and also eLearning. Best practice that we have observed includes the use of eLearning to cover significant Consumer Duty issues in a comprehensive and cost-effective way.
The Consumer Duty is all about outcomes, but so is training on the Duty. The best practices that we have seen in firms are designed to produce an outcome whereby staff know what to do for their customers in any given situation (or where to get advice if they don’t know) and the Board and Senior Management gain an assurance that the culture of the firm prioritises delivering good outcomes for its customers.
By Peter Haines, Director of GRC Training at CCL Academy, and Nigel Sydenham, Director of Compliance Training at CCL Academy