Organisations across banking and insurance have been working hard to meet the newly implemented Consumer Duty regulations since before 2023.
The first Consumer Duty Board reporting requirement is due to be met by 31st July 2024, and while most organisations’ Consumer Duty programmes are still ongoing as they look to close data gaps, standardise metrics, test outcomes, and move from tactical to strategic solutions, recent surveys suggest firms are in a good place when it comes to meeting regulatory requirements.
However, we believe that over-optimism exists in this space, and what we see is a slightly different story!
How can I prepare?
As the deadline is speeding towards us, under the new Consumer Duty rules, organisations need to prepare a report for their Board by 31st July 2024, setting out the results and actions of monitoring of retail customer outcomes. The Board is then required to:
- Review and approve the firm’s report on customer outcomes.
- Confirm it is satisfied that the firm is complying with the Duty.
- Assess whether the firm’s future business strategy complies with the Duty obligations.
While most organisations have been reporting on Consumer Duty at the Board level for many months now, we still see many challenges with Board reporting at the clients that we are supporting through this journey.
Meeting the board reporting deadline
Here are a few tips and our view on how to help meet the board reporting deadline…
Stable report design
What we mean by this is, decide on a format for the Board report and stick with it. We have seen many changes to the format and content requirements across our clients. These changes are often poorly communicated with insufficient context or timelines to meet them, and as a result, a constant state of flux ensues.
An ever-changing target report means that the commentary that is so important to provide the context around the figures reported is difficult to write, and business areas are becoming increasingly frustrated and sometimes disengaged.
Our advice is to stick to the format you have now for a defined period. If you want to make changes, plan these properly, communicate effectively, and plan for the changes to be implemented together in the future, not piecemeal one by one each month.
Control the data gaps
Despite the optimism in surveys, we know that most organisations have struggled with getting the right data to be able to meet all of the Consumer Duty requirements. This is understandable and natural, and plans should be well underway to implement new data capture and aggregation methods to close the data gaps. However, what we are seeing more and more is that from one month to the next, as new data is being collated, we are seeing big changes in the way that metrics are being reported on.
We saw the number of metrics across one pillar double in the space of a month!
This is great regarding data gap closure; however, sufficient time is needed to introduce the new metrics and to understand the impact they have on reporting and thus, again, what the supporting commentary should be informing on.
Robust change management must be applied to the data gap closure, with additional metrics only being incorporated at the right time and when they are fully understood. It is ill-advised to introduce a swathe of new metrics for July’s report, for example.
Move to strategic report production
All clients that we have supported through Consumer Duty have had to implement tactical solutions to some degree either to capture the required data or to aggregate and create the end results.
When we say tactical, what we really mean is spreadsheets!
These unfortunately are largely still present with large amounts of manual effort required to maintain from one month to another as the reporting metric, then complexity increases, and the likelihood and reality of human errors being introduced also increase, which has a significant impact on report production.
Moving to strategic reporting solutions and processes with robust change management processes across them reduces the time to produce the report and the risk of errors being introduced, along with helping with the first two points we made.
In summary…
Stability, carefully managed processes, and change are all keys to successfully meeting the July 31st 2024 deadline… and we haven’t even mentioned data quality! We’ll save that for another blog!
If you’d like to speak to us about how you can stabilise, manage your process or give advice on managing the change to help you meet your deadlines, get in touch with Dufrain or contact me on LinkedIn.