Creating and sustaining the Consumer Duty Cultural Shift

Picture this: You're a call centre operator at a Financial Services firm. It's 4:55pm, and you're about to finish your shift. You need to leave on time to catch a train and cook dinner. Just as you're about to log off, you receive a call from a distressed individual with a bereavement to communicate. What would you do? What would your colleagues do? What would your leadership expect you to do?

The FCA’s Consumer Duty fundamentally changes how financial services firms interact with their customers, setting a higher expectation for customer care. To meet this, many firms require a significant shift in culture and behaviour, where employees consistently focus on generating continuous positive outcomes for customers – this is not just a tick box exercise. This cultural change will be brought about through sustained changes in the everyday decisions and actions people take, with people at all levels taking ownership for decision-making.

Just over six months in, firms are continuing work on embedding the Duty in their ways of working to ensure it is truly sustainable. This requires exploring what it means for their strategy, their business, and their culture.

At KPMG, we believe culture is influenced by purpose, vision and values, and demonstrated in the day-to-day behaviours of people across the organisation; the things they say and do. Their behaviours are directed by the actions and decisions of their leaders and managers and are influenced by training, communications, and how they are incentivised. It’s critical that firms create the right environment and ways of working to minimise barriers to doing the right thing and encourage ‘good’ behaviours. What their teammates and colleagues do or ‘get away with’ is influential – as Steve Gruenert and Todd Whitaker famously said, “The culture of any organisation is the worst behaviour the leader is willing to tolerate”.

Measuring culture is notoriously hard. In relation to the Duty, many organisations either don’t measure it or rely on surveys asking their people to rate their understanding of Consumer Duty. These surveys have a place; but understanding the Duty does not necessarily translate to behaviour and actions on the ground. Many other organisations will opt to evaluate the appropriateness and effectiveness of the things that influence culture like training, communications, performance management and incentives, as these are easier to measure, and data often already exists.

More effective ways to measure whether your culture supports good outcomes is by measuring the decisions and actions people take day-to-day, particularly in circumstances such as our opening scenario where there are competing priorities. Questions about leadership and managerial actions and the level of psychological safety to speak up are also very valuable as they highlight potential barriers to ‘good’ behaviours.

Organisations should:

1. Baseline their culture in relation to Consumer Duty through reviewing drivers of culture, assessing perception of tone from the top and measuring the actual or perceived behaviours of people across the organisation.
2. When conducting Outcomes Testing and carrying out data analytics work, consider whether the underlying root cause is cultural in nature.
3. Leverage colleague knowledge of processes and systems to identify barriers to doing the right thing. Removing these barriers from a colleague’s working environment can effect change quickly.
4. Continually evolve performance management and reward strategies to ensure the right behaviours are incentivised.
5. Seek to understand the degree of psychological safety in your organisation and take action to strengthen it where lower - a topic we will cover in a future blog.

Thinking back to our opening scenario; firms can have the best processes, technology, and data, yet the outcome for the customer is heavily reliant on the decisions and actions of the person answering the call. We all think we would take the time to help someone and assume our colleagues would do the same, but would they?

Our latest Consumer Duty culture offering combines our people, culture and regulatory expertise to assist firms in understanding and predicting behaviours that individuals are likely to take which could give rise to poor outcomes for consumers. Utilising KPMG’s purpose-built scenario-based survey tool, our analysis produces insight on the types of situation and groups of people that provide greater concern and how to address these challenges early. Please get in touch for a discussion to hear more about how our expert team and bespoke survey tool can support.

This article was co-authored by Mita Dave, Katie Paton, Lauren Smith, Jackie Todd and Hannah Jordan.