Culture clash – Consumer Duty: is it only skin deep?


Will the regulator fail to achieve its fundamental objective of changing the culture of UK FinServ firms and transforming the prevailing negative public attitude towards the sector?

I am not pointing the finger or indeed “taking sides”; I am simply drawing the reader’s attention to the fact that (IMO) the regulator will fail in their ambition to change the culture of firms with a piece of legislation like Consumer Duty. On paper, it reads well and makes complete academic sense. But real life is different, and culture is a complex thing. To change it, you need to win the hearts and minds of all those who intend to remain in that business. Perhaps one should ask – aside from moralistic arguments – why should/would a firm change a culture that has worked perfectly well in some instances for over a century?

The regulator believes that Consumer Duty requires firms to change the very essence of how they operate. It (Consumer Duty) is not, as one commentator put it, “TCF on speed”. The Duty insists the customer is put at the epicentre of a firm’s decision-making process and, for that to occur, it apparently requires a culture change, not a tactical fix or ‘bolt-on’ to BAU.

Firms can’t put the customer at the centre of their thinking if their employees aren’t sufficiently skilled/competent to do so at the point of a customer interaction.

However, it would appear many firms are treating it as such, and this has prompted the regulator to comment on Wednesday 25th January 2023, almost exactly six months before the Duty becomes reality.

“The Financial Conduct Authority has said some firms’ plans to implement its incoming Consumer Duty have only considered requirements superficially or have been over-confident that existing policies and processes in place will be adequate”.1  

For me, this highlights a cultural clash between firms and the regulator. Let’s face it: The City has always existed primarily as a money-making centre. Ask Joe/Joanna Public and you are like as not to get a very jaded perspective that largely positions The City as greedy, money-grabbing, and less than scrupulous – even dishonest. I don’t think many reading this would disagree with the stereotype, but many might take exception at a personal level, which is completely fine and positive.

It is this sector stereotype however that the regulator is desperate to change and has concluded, probably rightly, that the wishes of the customer have historically come an awkward second to making profit. Particularly if making profit is at the expense of the best interests of customers. This is not to say individual firms are not working hard to deliver excellent value to customers. Rather – as a collective – The City and its associated institutions (wheresoever they be located in the UK), don’t have a great reputation.

Speaking at City and Financial Global’s 8th Annual Culture and Conduct Forum for the Financial Services Industry on November 20th 2022, Emily Shepperd – Chief Operating Officer and Executive Director of Authorisations at the FCA – reinforced the negative stereotype financial services firms had.

“Giving examples of the Wolf of Wall Street and The Big Short, she said all of these demonstrate financial services in a negative light”.

I get the sense the regulator is increasingly frustrated that perhaps too many firms are approaching Consumer Duty as a “piece of work”; some “operational change” they need to comply with before getting back down to business. I wonder to what extent industry business leaders look at legislation in this way: “it’s something we need to do in order to continue to operate.” SM&CR for example falls squarely into this box. Dare I say: fill in the forms, tick a box and get on with business.

If one stands back and looks at the scale of regulation and operational change that has landed on the sector over the past five years and asks the harsh question: “what has changed?” You would conclude, aside perhaps from some additional administration, generally very little. I appreciate that in some instances certain firms have made seismic changes to the way they operate, and these firms and their leaders should be applauded for doing so, but these are (IMO) in the minority and the regulator knows it.

Are firms really going to change their culture? Whilst I hear many organisations bemoaning the difficulty of proving they have a customer-centric culture; I wonder just how easy it will be for the regulator to prove they do not! I mean, remove the obvious wrong products and unfair practices from your organisation and aren’t you most of the way there? You haven’t changed your culture; you have just stopped selling some products that were – on reflection – deemed unsuitable. Oh, and if these products were particularly profitable then that lost income needs replacing and – given there is only one cheque book in the equation – it will be the consumer who pays, one way or another.

Perhaps in reality this removal of unsuitable products and unfair operating practices is in itself a big and easily banked win for the regulator: it is easy to audit and very conspicuous. Any firm that fails to do so is probably obvious and thus easy to apply sanctions. So, if firms just deal with the blinding obvious wrong products and unfair (to the consumer) working practices, they won’t need to change their culture and Consumer Duty will – like as not – be consigned to a growing list of legislation that looked good on paper but failed completely to move the dial!

I think it rather comes down to the regulator’s ability and willingness to get under the skin of firms in the sector. If they really want to “test” a firm’s customer-centric culture, then who better to speak to than customers and firms’ employees? Even with the best will in the world, a culture where employees are not genuinely competent in-role, will be quickly exposed. I notice at this point many firms shake their heads and explain they have the “advice” angle completely covered already. (It is this belief I suspect that prompted the comment on 25/01/23 from FCA about firms’ over-confidence).

Ignoring for the moment the issue of advice, instead focus on the ability for a customer to get through to speak with somebody when the Average Handling Time has escalated to the point where customers give up. Or individuals are unable to effectively answer queries and questions on the first call, necessitating sometimes numerous call backs until an employee who does know the answer is found.

Or where an individual presents as vulnerable and the employee simply wasn’t sufficiently competent to spot this and act accordingly.

I think Consumer Duty is ultimately going to be the catalyst for a culture clash between the FCA and a great many firms, but curiously not as the regulator envisaged. Firms can’t put the customer at the centre of their thinking if their employees aren’t sufficiently skilled/competent to do so at the point of a customer interaction.

Much of the regulation introduced by FCA that impacts employee Training & Competence has, in most firms, historically been dealt with in a lowest-possible-cost to serve, tick-box fashion. As a result, we know from more than 100m interventions of our AI application, Clever Nelly, that – on average – the actual level of employee in-role competence and knowledge is just 54%. If your employees know about half of what you need them to know to perform optimally in-role, how can they possibly and consistently deliver to the standards the regulator envisages?

If I were the regulator, seeking a dead easy, super-cheap methodology to assess the seriousness of a firm’s preparations and readiness for Consumer Duty, I might be inclined to ask the question: “how do you train your employees and how do you know they are actually competent?” I suspect most of us would at this point feel super uncomfortable, if all we had to evidence competence was an annual short term memory test and a very small sample of QA data.

The reality is that in the regulator’s enthusiasm to improve standards and introduce even more regulations, firms have responded by losing sight of the spirit of the law and instead focused on the letter of it. This has enabled a culture of tick-box compliance to become the norm. It serves the purpose for which it was designed, in so much as it demonstrates training was done and refreshed every year – often at the lowest possible cost. It does not, however, ensure employees are competent and knowledgeable in role; surely now a pre-requisite for any firm seeking to embrace the spirit of the law and comply with the Consumer Duty.

[1] FCA: Some firms’ consumer duty plans ‘superficial’ and ‘over-confident’ –


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Adrian Harvey is CEO at Elephants Don't Forget. Elephants Don’t Forget are world leaders in the use of Artificial Intelligence to augment how each employee learns, retains and evidences in-role knowledge and competency. We support employee competency and compliance training of some the world’s most recognised brands including Microsoft, Vodafone, Experian, Allianz, Old Mutual, Aviva, Eon and Volvo.

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