Consumer Duty has prompted a cultural shift across financial services, but standards continue to vary between firms three years after its introduction, according to Capco.
Michael Shand, managing principal at the financial services and technology consultancy, said the regulation had increased transparency around fees and charges and encouraged greater scrutiny of fair value since it came into force on 31 July 2023.
He said: “Consumer Duty has delivered meaningful improvements for consumers by increasing transparency around fees and charges, driving greater scrutiny of fair value and moving vulnerability from a niche compliance consideration to a mainstream business issue.
“Firms are making greater use of customer data and insights to measure outcomes, and are asking harder questions about whether they are genuinely delivering fair value, rather than simply meeting regulatory requirements.
“However, there remains significant variation between firms, with many still having further to go.
“The biggest change has been cultural. Consumer outcomes are now much more firmly embedded in decision-making when firms develop products, redesign services or make strategic changes.
“This shift has been particularly noticeable in board discussions, where customer outcomes have become a standing consideration alongside financial performance and risk.
“In many organisations, Consumer Duty has helped rebalance priorities after a prolonged period in which the focus, understandably, was dominated by capital, regulation and balance sheet resilience following the financial crisis.
“The firms seeing the greatest benefits are those that have embraced the underlying intent of the regulation. They are using customer data, behavioural insights and research to identify harm and improve outcomes, delivering not only better experiences for customers but also stronger loyalty and more successful innovation.
“By contrast, some firms continue to treat Consumer Duty primarily as a governance and documentation exercise.
“From here, firms should consider how they use Consumer Duty as a catalyst for continuous improvement. The organisations that go beyond a narrow compliance and consider how it can help them strategically differentiate what they do will be most successful.”
