October 24, 2023

October 24, 2023

October 24, 2023

Financial Conduct Authority Annual Public Meeting 2023: Insights & Highlights

Financial Conduct Authority Annual Public Meeting 2023: Insights & Highlights

Explore the key insights and highlights from the Financial Conduct Authority's Annual Public Meeting 2023 in our latest blog post.

Explore the key insights and highlights from the Financial Conduct Authority's Annual Public Meeting 2023 in our latest blog post.

On the 4th of October, the Financial Conduct Authority (FCA) delivered their Annual Public Meeting, a rare opportunity to see the inner workings and priorities of the body for the year ahead. In this year's meeting, the primary focal point of discussion was the recently enacted Consumer Duty—an encompassing framework that the authority labels its regulatory "wrapper." With a 5% surge in customer complaints in H1 2023, it is now more crucial than ever to pay attention to the FCA's warning calls. Our analysis delves into the essence of the Consumer Duty, dissecting its far-reaching implications for businesses and the key points of the Annual Public Meeting.

The Consumer Duty

The FCA's recently introduced Consumer Duty ushers in a new era of financial regulation in the United Kingdom, emphasising the imperative of ensuring consumers receive fair value and equitable treatment. Under this framework, firms are tasked with undertaking comprehensive assessments of product value, considering both the customer perspective and the need for individualised evaluations across diverse sectors. The Duty extends beyond the point of sale, mandating that customers face no unreasonable barriers during a product or service's lifecycle, and they receive adequate support, particularly in cases of inquiries, claims, complaints, or switching providers. This therefore offers more scope for customers to escalate their claims to the ombudsman, costing firms £750 per hearing.

Additionally, the FCA places a premium on transparency and responsiveness, urging firms to monitor call waiting times and provide various channels of support to meet the needs of all customers, including those with characteristics of vulnerability.

Overall, the Consumer Duty signals a pivotal shift in the financial industry's ethos, one that places customer well-being and fair treatment at the forefront of regulatory priorities.

Key points from the FCA’s Annual Public Meeting

Data for good outcomes

“Firms need to invest in data collection that they can analyse in order to continually improve outcomes for consumers”

The Financial Conduct Authority (FCA) has made a resounding statement with its introduction of the Consumer Duty, highlighting the pivotal role of data in fostering positive customer outcomes. By encouraging firms to proactively use data and metrics, the FCA paves the way for a financial industry that is not only more responsive but also better equipped to meet the evolving needs of consumers, ultimately fostering a landscape of fair value and equitable treatment.

This is also emphasised in the “FG22/5 Final non-Handbook Guidance for firms on Consumer Duty” (Financial Conduct Authority, 2022) where firms are entrusted with the responsibility of ensuring that customers receive adequate support “throughout the lifecycle of a product”, extending well beyond the point of sale including “complaints”. This customer-centric paradigm hinges on data-driven insights, with firms expected to harness customer feedback, complaint data, and transaction information as essential tools for continuous improvement. The FCA's unwavering commitment to data-driven decision-making underscores a transformative shift in the financial industry's ethos, where data becomes the linchpin for delivering this consumer-centric approach.

CourtCorrect's AI tools provide invaluable support to organisations by seamlessly offering case prediction and utilising case-based reasoning. These tools harness a dual data stream, comprising both internal information and external data from the relevant authorities, a dynamic combination that empowers users to make informed decisions even when they are influenced by external bodies. What makes CourtCorrect truly remarkable is its ability to automatically update and integrate these diverse data sources, fostering a continuous enhancement of decision-making capabilities.

Promotion of AI

"[W]e are pleased to see that firms are considering the adoption of AI and are thinking about the impacts on the firms and financial services industry."

The FCA has expressed its positive outlook on the increasing adoption of artificial intelligence among financial firms. They view use of AI as adopting a pro-innovation approach that embodies pragmatism and adaptability, enabling businesses to stay agile in an ever-evolving landscape. This endorsement of AI by the FCA is not just lip service; they have been actively engaged with AI and machine learning since 2019. Last year, they took a significant step by publishing a comprehensive discussion paper on the topic (DP22/4: Artificial Intelligence), signalling their commitment to fostering innovation in the financial sector.

Furthermore, the FCA's enthusiasm for AI transcends national borders. They are deeply involved in extensive international collaborations centred around AI, showcasing their dedication to driving global advancements in financial technology. In addition to these efforts, the FCA is collaborating with the Digital Regulatory Cooperation Forum (DRCF) to provide support and expertise within the AI and digital sandbox environment. It is therefore paramount that firms adopt this suggestion and embrace artificial intelligence to assist with customer service.

The FCA also emphasised that firms need to stay up to date with Financial Ombudsman Service decisions and incorporate this into their process. This ever-changing legal corpus offers a challenging task for any complaints handler, underlying the need for greater data analysis.

Vulnerable Consumers

"When addressing vulnerable characteristics - we want firms to analyse data to address these specific customer needs"

The FCA's commitment to the Consumer Duty extends to its unwavering focus on vulnerable consumers, underscoring the importance of incorporating this critical dimension into datasets. The Duty mandates that firms prioritise the needs and challenges of vulnerable customers, ensuring that they receive a more tailored level of care and consideration.

The FCA’s Financial Lives Survey 2022 highlighted that an estimated 47% of FCA regulated complaints come from vulnerable customers. These customers are given special scrutiny by the ombudsman, often holding firms to higher standards.

CourtCorrect has created a tool to mitigate this risk that seamlessly aligns with the Financial Conduct Authority's (FCA) guidelines for complaint analysis. With surgical precision, this state-of-the-art technology meticulously scrutinises complaints to detect subtle indicators of customer vulnerability, promptly raising a flag when such signs are identified. This flagging system, finely tuned to the directives of the FCA, equips organisations to identify vulnerable customers more effectively than ever before. Beyond mere detection, it's a commitment to ensuring that these customers' concerns are addressed with the utmost care and precision, fostering a regulatory environment that is as diligent as it is empathetic.

In the midst of the financial regulation landscape, the 2023 Financial Conduct Authority's Annual Public Meeting shed light on some significant shifts. The introduction of the Consumer Duty marked a clear move towards prioritising fairness and transparency for consumers, particularly those who are vulnerable. The FCA's endorsement of data-driven decision-making and AI adoption signals a practical embrace of innovation, both locally and globally. In this context, CourtCorrect's AI tools provide a noteworthy solution that aligns with regulatory standards. As the meeting concludes, it underscores the industry's adaptability and the FCA's commitment to consumer protection and effective regulation in an evolving financial world.