The four consumer duty outcomes

The four Consumer Duty outcomes, and the importance of Evidence

Hi. I’m Alistair McQueen at Aviva.

In this short video I will look at the four Consumer Duty outcomes against which we will all be judged.

First, the Products and Services outcome. This is to ensure the design of all products and services continue to meet the needs, characteristics and objectives of their target market.

In other words, our products and services must do what they claim to do, for those they are intended to serve.

Second, the price and Value outcome. This is to ensure that all products and services give fair value.

Against this outcome, I’d pause and say that this should not be interpreted as an instruction from the FCA to operate at the “lowest price”. Low prices or charges in themselves do not evidence fair value.

Equally, higher prices, or higher charges, do not evidence poor value. The FCA is not imposing price caps. Nor is the FCA mandating how charges should be structured. All charge levels and all charge structures are permitted - so long as it can be evidenced that they deliver fair value.

Third, the Consumer Understanding outcome. This is to ensure that all communications are understandable and understood.

For many years we have had to ensure that our communications are clear, fair and not misleading. And this remains. But the Consumer Duty will challenge us to ensure that, what we may believe is understandable, is also understood.

Let’s remember that, while we may live and breathe our industry and speak its language, the millions that we serve probably do not. We are not the customer.

And fourth, the Consumer Support outcome. This is to ensure all customers can realise the benefits of their products or service.

Our products and services may be working well, and demonstrating fair value, and communicating in a language that our customers understand. But if we fail to support and serve them, from beginning to end, we will be falling at the final hurdle in our need to support good outcomes.

Throughout the FCA’s writing on the Consumer Duty it makes reference to our need to consider, and support, “vulnerable customers”. To quote the FCA, a vulnerable customer is “someone who, due to their personal circumstance, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”.

Millions of people rely on financial services in the United Kingdom. And sadly, but inevitably, many will carry vulnerabilities. Aviva support’s the FCA’s expectations that we all give specific consideration to this population. We are sure you do to. The Consumer Duty repeatedly reminds us of this important responsibility.

I’d summarise the four outcomes as a challenge to place our customers’ interests on the same footing as our commercial interests. I’d summarise it as a challenge to deliver good products and services, at good value, with good understanding, backed by good support.

The importance of evidence

Critically, it will be essential for us to evidence that all we are doing is “good”. We cannot just claim that all we are doing is good. As a reminder, we may be judged as “guilty until proven innocent”.

Data will become increasingly critical as we all seek to evidence our compliance with the Consumer Duty. For example:

• what data do we have to evidence that the customers we serve are within our target market?
• what data do we have to evidence that our prices are in line with our competition, and are fair?
• what data do we have to evidence that our communications are driving the actions we expect?
• and what data do we have to evidence that we delivering against our service levels?

 Data, not words, will demonstrate our compliance with the Consumer Duty.