We are now over 3 years into Consumer Duty and the FCA expects it to be embedded into firms’ processes and how they do business such that customers get good outcomes.
The FCA has recently published some findings from its work on looking at fair value in the consumer finance market.
Although this time the FCA did not focus on motor finance, in part because it has already gone through a lot of positive change in this space in conjunction with all the work on motor finance commission, the findings are a useful reminder. Most of these points will fall to the lenders as the manufacturers of the product, but everyone in the distribution chain still has a role to play to ensure that customers get good outcomes.
The main findings were:
-
Consider the full range of financial and non-financial costs (for example, consumers’ time and effort), alongside the benefits customers could reasonably expect to receive.
-
Support the fair value conclusions with relevant management information (MI) and evidence of customer outcomes.
-
Assess outcomes for different groups of customers, including customers with characteristics of vulnerability.
-
Monitor customer outcomes to identify and address potential fair value concerns and taking appropriate action where necessary.
-
Communicate fees and charges clearly and prominently, and using testing and monitoring to assess whether customers understood them.
-
Use controls such as grace periods, limits on repeat or cumulative charges, and fee waivers or refunds to reduce the risk of causing foreseeable harm.
Of the above, identifying vulnerable customers and communicating fee and charges are clearly the ones that are more relevant to dealers, given that they are the ones initially interacting with the customers.
ITC’s systems and training should ensure that dealers are in a good place, and this is also monitored and followed up on our site audits and visits.
