Regulation in Banking – Consumer Duty – Strategic Intelligence

Regulation in Banking Consumer Duty Strategic Intelligence Report Overview

Consumer Duty legislation in the UK is a paradigm shift in consumer protection, setting a much higher bar for “duty of care”. It is no longer sufficient for financial services providers to follow checklists and guidance to avoid harm to customers. Banks are now required to take responsibility for ensuring the right “outcomes”. These “outcomes” must be evidenced to the regulator on an ongoing basis, with plans to close gaps if and when they occur, and these outcomes apply across all products and all processes.

The ‘Consumer Duty’ thematic intelligence report gives you an in-depth insight into the theme and the ways it will impact the consumer industry. It further entails a deep-dive analysis of the industry, including key market trends that will shape the consumer industry over the coming years. The report gives an insight into the market players and the competitive landscape within the theme.

Consumer Duty – Key Trends

The main trends that will shape the consumer duty theme over the next 12 to 24 months are classified into technology, macroeconomic and social, and regulatory trends.

• Technology trends: The key technology trends impacting the consumer duty theme are automation, ongoing data consolidation, and real-time data collection, among others.
• Macroeconomic and social trends: Inflation, rising interest rates, financial inclusion, and de-banking are a few of the macroeconomic and social trends driving the market.
• Regulatory trends: The role of FCA as a global leader and hidden fees in foreign exchange transactions are a few of the regulatory trends impacting the consumer duty theme.

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Consumer Duty Value Chain Analysis

The consumer duty value chain is made up of the board, human resources, marketing, client-facing staff, product owners, and compliance teams.

A key part of the consumer duty is ensuring responsibility for good customer outcomes is understood and owned across the business; not just by risk and compliance teams but embedded from product design through to post-sale support, so that everyone in the organization understands “why and what”.

The Board: The FCA specifically requires firms to appoint a Consumer Duty champion at the board or equivalent level. The champion plays a critical role in setting the tone top-down for how important the Duty is, and in supporting the Chair and CEO by raising the Duty in all relevant discussions and challenging the firm’s efforts to embed the Duty and prioritize consumer outcomes. To deliver this, individuals will need training, support, and structured governance frameworks.

Consumer Duty Value Chain Analysis

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Consumer Duty – Competitive Landscape

The key companies that will make their mark within the consumer duty theme are as follows:

Retail Banks in the UK: A few of the leading banks in the UK making their mark within the consumer duty theme are Barclays, Chase, and Co-operative Bank, among others.

Retail Banks in the Rest of the World: A few of the global leading banks making their mark within the consumer duty theme are DBS, Deutsche Bank, and FNB, among others.

Key Companies in Consumer Duty Theme

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Banking Sector Scorecard

At GlobalData, we use a scorecard approach to predict tomorrow’s leading companies within each sector. Our sector scorecard has three screens: a thematic screen, a valuation screen, and a risk screen.

• The thematic screen ranks companies based on overall leadership in the 10 themes that matter most to their industry, generating a leading indicator of future performance.
• The valuation screen ranks our universe of companies within a sector based on selected valuation metrics.

• The risk screen ranks companies within a particular sector based on overall investment risk.

Banking Sector Scorecard – Thematic Screen

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Key Highlights

• The UK banks score among the best in the world at providing a clear understanding of their customers’ finances, and they are managing to do this with digital money management tools. Across the duty compliance period (2023 to 2024), satisfaction with these tools among the UK banks was significantly above the global average.
• The UK consumers’ satisfaction with their banks offering competitive prices is above the global average and remained flat across the review period. This is encouraging, suggesting that UK banks are passing savings rates on to consumers and reducing fees.
• A critical aspect of customer support is easy access to branches and call centers, where UK satisfaction scores were the worst across examined metrics. This suggests this is an area where UK banks are not satisfying customers, despite it being a key dimension of Consumer Duty.

Reasons to Buy

• Understand the core focus areas of Consumer Duty legislation in the UK, and how that compares to other regulatory approaches, both in terms of focus and approach.
• Understand which technology investments are helping banks in the UK and elsewhere deliver on the customer experience elements prioritized by the Duty and why.
• Understand how various macroeconomic and social trends in the UK are complicating Duty compliance, and raising the bar for providers that must deliver the right outcomes.
• Access granular consumer survey insight in areas comparable to the Duty to see how the UK has performed across the Consumer Duty compliance period.