The letter reminded firms of the timeline set out for implementing the Duty - including the hard deadline
Reminding firms of the strong emphasais on definining, monitoring and evidencing the outcomes experience by consumers, the letter continued:
"This monitoring must enable firms to identify where customers, or groups of customers, are experiencing poor outcomes and where this is the case firms must take appropriate action to rectify the situation."
The regulator acknowledged that the long-term nature of then life insurance sector 'poses different considerations and challenges for implementing the Duty as compared to other sectors', raising the probability that a customer may experience periods of vulnerability over the life of the process. It also notes that long-standing customer engagement and understanding can be low which raises the risk of harm.
It set out its priorities for life insurance firms, including supporting decision-making for pensions and retirement consumers, including increasing consumer engagement and the boundary between advice and guidance.
However, the FCA also noted that the existence of outsourced service privders, or OSPs, complicated Consumer Duty rules for life insurance firms, adding:
"We recognise that the volume and complexity of closed book business pose operational challenges, that, in many cases, are administered and managed by OSPs. However, we remind life insurers that they cannot contract out of their regulatory obligations and we expect firms to demonstrate robust oversight over any OSP arrangements. In addition, as firms with material influence over customer outcomes, FCA-regulated OSPs also have their own obligations to ensure they comply with the Duty. We expect this to be an area of particular focus for you and your boards, and for FCA-regulated OSPs to work closely with client firms to implement the Duty."
