More than a third (37%) of advice firms have reviewed or changed their fees structure since the Consumer Duty was introduced, according to Sheldon Mills, executive director of consumers and competition at the Financial Conduct Authority (FCA).
Six months in, many firms have already made great progress on the Consumer Duty, Mills (pictured) said in a speech today.
However he warned there were still remaining issues including around showing the fair value of products and services – and warned firms not to just “repackage existing” data or compare themselves to market competitors.
Culturally and operationally changing
Giving his view over the first six months of the Consumer Duty regime, Mills said: “For example, they are offering the right products and services to the right customers; eradicating jargon and moving clients to less bespoke and cheaper options where that is a better fit.
“We have seen board-level leaders giving serious consideration to what the duty means for them culturally and operationally.
“Separately, we have seen some firms offering fairer value too, by increasing value received by savers, reducing fees, and maximising benefits to customers.”
Small firms also came in for praise, as Mills noted that the FCA had published a survey looking at the progress they had made.
“We were pleased to see significant progress since the last time small firms were surveyed,” he said.
Do not wait for interventions
But its not all good, as he noted that there is still much room for improvement.
Mills said: “We do not want to see firms waiting to see if we will intervene to address an issue.
“Firms also need to get serious about their data and not assume they can just re-package existing information.
“And we want to see the duty embedded across every firm at every level, with leadership from boards.”
He said that perhaps the most challenging outcome of the Consumer Duty for firms to meet is that of fair price and value.
“We do not set prices: Our job is to make sure that markets can work well,” he continued.
“They can’t if products and services fail to offer fair value, or if they offer features that lead to foreseeable harm.”
Equivalent of Google Shopping is not proof
And there are areas where firms could do better.
“Many of the fair value assessments we have seen are not relying on solid data and other credible evidence to justify the product’s value to retail customers,” Mills said.
“Some firms for example have relied solely on benchmarking against the market when considering their pricing, rather than considering a fuller range including the real value that a consumer derives compared to the price they pay.
“The equivalent of a Google Shopping search does not prove to us that a customer is getting a fair deal.
“We want to see firms considering all the aspects of fair value at the product level and considering the impact on different consumers.”
He also had a warning for boards, as he said: “Board reports will come under greater scrutiny as we look to these to evidence the steps firms are taking to drive good outcomes. “
Summing up, Mills said: “Getting it right for consumers means higher standards and healthier competition.
“It means improving trust in our sector, it means supporting growth and innovation, and it means boosting the UK’s competitiveness on a global stage.
“Competitiveness comes from being a beacon of high standards and fair value – and from entrenching consumer trust. This in turns attracts investment.
“The prize is huge if we can get this right.”