FCA Thematic Reviews
The FCA has recently published the outcomes of two “Thematic Reviews” affecting the insurance sector.
In a Thematic Review the FCA looks at firms’ policies and procedures in respect of a specific area of regulated activity to make comparisons between firms with a view to identifying both good practice and areas of common weakness. The two recently published Thematic reviews are:-
Thematic Review into firms’ approaches to complaints and root cause analysis
Here the FCA reviewed complaints practices in 40 firms across a range of sectors. The FCA concluded that understanding and monitoring the outcomes customers are experiencing, where problems are identified via complaints handling, is a key part of meeting the requirements of the Consumer Duty.
For the firms sampled in the review, the FCA identified good management information (MI) and clear governance structures as a key area of good practice. It identified the following three key areas for improvement:-
- Analysing data for different customer types. While complaints MI was captured, it was not always sufficiently granular to inform the firm about the outcomes for different groups of customers, including those with characteristics of vulnerability. This means that some issues are not being properly identified, especially where firms have diverse target markets for their products.
- Taking action based on the insights. It was not always clear whether there had been appropriate discussion on the data at decision-making forums and what actions would be taken. This means opportunities to make changes to improve consumer outcomes are being missed.
- Assessing and measuring the impact of these actions. Firms did not always measure the impact of interventions they had made to ensure these were the right changes to make. This means that sometimes firms pursued actions even though they were not as effective as they may need to be.
You can see the webpage (which highlights more good practice and areas for improvement) here:-
Thematic Review into Consumer Duty Board Reports
Under the Consumer Duty, firms must prepare, at least annually, a report for their governing body, which sets out the results of the firms’ monitoring of consumer outcomes and any actions required as a result of the monitoring.
The FCA reviewed reports from 180 firms, from a range of small, medium and large firms, and with a range of business models, to help it understand their differing approaches.
Overall, the FCA found that the best reports were structured in a way that made them easy for their boards to scrutinise the key elements that the rules and guidance suggest they should cover. It highlighted the following as key aspects of good reports:
- Clear outcomes focus. Good reports included dedicated sections focused on each of the four customer outcomes, detailing what good outcomes looked like for customers holding their products.
- Good quality data. To back up a firm’s conclusions, a report should include commentary on good outcomes supported by good quality management information.
- Analysis of different customer types. Firms should consider different groups of customers in their reports, including those with characteristics of vulnerability.
- Clear processes for production of report. Firms should have clear processes in place for producing reports for firms’ governing bodies to review and approve within the necessary timeframe.
- Firm focus on culture. It is helpful for firms to include commentary emphasising their commitment to effectively implementing the duty and the role of a positive culture in delivering good outcomes.
You can find the full findings here:-
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January 2025
