From this perspective, firms may wish to try and form an idea of their current customer base and identify any notable ‘gone away’ customers and consider what steps should be taken to try and engage with them.
An initial check-in letter may be a good starting point, which is sent to those customers to provide a recap of the current products and services they have with the firm, and offer customers the opportunity for a meeting or telephone call to discuss the products, the customers’ current needs, and ensure that customers have a clear point of contact for the firm that they can reach out to when required.
If, following these efforts, a customer still fails to engage or confirms they do not want to be contacted, then firms should ensure this is being documented and recorded.
4. Addressing ‘vested rights’
These include rights such as annual fees or exit charges. The FCA’s concern is that these rights may lead to poor outcomes for consumers and undermine the benefit of a product.
Closed-book lifetime mortgages have been specifically cited as an example of a product where customers can develop characteristics of vulnerability during the lifecycle of the product.
Mills advised that where problems such as these are identified, the FCA still expects firms to take action to mitigate harm, and that it expects firms to offer extra support to consumers where necessary.
In the first instance, vested rights may be a matter that firms can try to address within their fair value assessments, since there is a clear correlation – at least from the FCA’s perspective – between these rights and the potential benefit to a product.
Firms will need to consider how best to mitigate and reduce the impact to customers from these issues, and what solutions they can offer to customers, for example product switching. Firms may also wish to consider whether there is scope to amend or waive certain charges such as exit fees.
While there is a balancing act to be struck with the need to consider commercial realities, firms should not be allowing these to prevent them from taking steps to mitigate harm to consumers.
The importance of data
As an overarching principle, firms should be sure that they are keeping clear records and collecting data on their compliance and performance with the consumer duty, and that they are able to provide data to the FCA when required.
Firms should work on the principle that 'if it is not recorded, it did not happen', meaning that if there is no evidence of, for example, board assessments or interim reviews of implementation plans, then the assumption will be that these discussions did not take place.
