Consumer Duty – Looking at Data Differently to Determine Good Consumer Outcomes

In our last Consumer Duty article, we explored the need for an effective six step approach to Governance, Risk and Compliance (GRC) around the production of Management Information (MI). Appropriate MI in turn supports effective, timely, mitigating activity and is used to properly evidence good outcomes for Consumer Duty (CD).


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Managing Consultant

In this latest blog, we dive a little deeper into which MI would be considered as ‘critical’ for a firm's CD dashboard, to allow a firm to monitor and evidence their effective oversight of consumer outcomes, derived from the products and services that they offer to their retail customers. We will also help unpack what ‘Using Data Differently’ signifies from the Financial Conduct Authority (FCA)’s perspective, and how cross-referencing data sets can provide better insight into what outcomes a firm's retail consumers are truly receiving.

Considering the recent industry findings from the FCA Autumn requests, (published on 14th December 2023); it noted that firms using a range of data points, rather than relying on a single data source/metric, were better able to consider different types of consumers and outcomes in varying scenarios. These firms were able to clearly identify areas requiring improvement or remediation in line with the Duty.

Many of our clients have found that data sourcing is one of the largest challenges in implementing CD across their businesses, however, starting point for firms to create effective oversight is essentially the same.

So, what are the key or critical metrics you should be looking at? And how does one break this down to a manageable view that can be aggregated from local Risk and Control forums, through to the Board Risk Committee? Whilst there is not a precise MI dashboard solution that can be considered as a one size fits all approach, there are tried and tested frameworks that have shown they meet the guidance given by the FCA.

The key to pulling the critical metrics together and using the data available differently, is keeping the prime objective of the dashboard and metric suite at the heart of the development. This being; ‘to provide sufficient oversight of key CD related performance indicators that are being regularly collated, with their context and impact being understood, to facilitate appropriate action being taken where correction is required against the desired good consumer outcomes’.

Therefore, it is paramount that the CD related metrics demonstrate that the firm is meeting the CD Principle 12 (Principle 12: A firm must act to deliver good outcomes for retail clients), and that the critical metric view covers the four outcomes. This layered view focuses on the key elements of the firm to consumer relationship across; Products & Services, Price & Value, Consumer Understanding and Consumer Support.

An increasingly integral element of our clients’ CD MI Dashboard challenge is how to include and demonstrate the 3 cross-cutting rules in their data view. These rules are that a firm must: Act in good faith toward retail customers, avoid foreseeable harm to retail customers, and enable and support retail customers to pursue their financial objectives.

This type of ‘layered’ data view, which we have previously used with clients across the CD requirements, forms a successful approach to help apply the FCA’s guidance around ‘using data differently’. It demonstrates a desire to act in accordance with the cross-cutting rules. Layering a view requires a firms data capture, production, and use, to be accurate and of a consistent quality.

Once a firm has reliable data feeds, layering their data view requires looking at data metrics in relation to others.

As an example; you may view the number of all complaints received versus complaints from vulnerable consumers on a related topic (e.g. digestion of a particular product and/or service). This view is then coupled with a further deeper lens covering the fees, charges and revenue associated with the product and service. This helps in understanding the fair price and value impacts on the target markets in a product’s design and monitoring framework. The outcome of this provides an answer for you; does this data indicate a change is required to align better to the good customer outcomes required under CD?

In addition to this, the legacy and back-book products many firms are managing means much of their business may fall into the ‘Closed Product’ element of CD; this being the need for a proportionate ‘Closed Product’ review ahead of the 31st July 2024.

As such, when a firm is layering its view within its CD metrics dashboards, it also needs to consider those consumers often unintentionally mislaid over time in its ‘Closed Products’ books, when breaking down the view of the outcomes the firm is delivering to its retail customers across its entire business model.

Through supporting various Retail clients, we have found that there are 4 key elements to building out CD metrics and associated dashboards, that will help support a firm in meeting the FCA stated use of data, to drive good customer outcomes and help them take appropriate timely action to align where necessary to the CD requirements, and minimise any potential harm.

These are:

  • Feeds/outputs validated: The data needs to be accurate and of consistent quality

Creating, testing and validating consistent data feeds, that facilitate outcome insight and analysis across the four outcomes and three cross-cutting rules.

  • Consider the wider view: Metrics to be identified across a range of cross-impacting variables

As part of the CD MI data sets creation, gauge the interaction between the individual and/or groups of metrics, and how they provide the deeper lens view to the customer outcomes that are being created from the firm’s operations.

  • Triggers/limits allow a RAG status identifier: Tolerances to be set as soon as possible

Noting the peaks and troughs in the historic data sets (where available or this may need forward generation) when setting the initial tolerances against each CD MI metric and refining them over time, will provide a more responsive CD MI dashboard.  

  • Regular production, analysis and reporting of metrics: e.g.The six effective steps to GRC’

Putting the right MI in front of the right people at the right time, to facilitate the right decisions to take the right actions to generate the right outcomes.

Whilst the FCA continues to review the industry implementation of CD, recent review outputs suggest data remains at the forefront of current and future thinking from the regulator, with the power being in data and its effective use in meeting the requirements of CD.

How we can help:

Our specialist Consumer Duty team at Delta Capita are well placed to benefit your business strategy and harness your growth potential, having partnered a number of clients through phase one, by building out their CD MI Dashboards, including the annual Board CD Reporting packs and the reporting GRC frameworks; with continued on-going support being given in refining the approaches through Phase two (Aug ‘23 – July ‘24) of CD implementation.

Our team is highly skilled at supporting clients, in gaining that clearer understanding of how they can master the Duty and drive good customer outcomes.

To find out about how we can support you, contact us and speak directly to one of our experts.