Speech by Emily Shepperd, chief operating officer, at the 2025 Risk Leader Summit, hosted by the Professional Risk Managers International Association (PRMIA).
Emily Shepperd
Speaker: Emily Shepperd, chief operating officer
Event: 2025 Risk Leader Summit, hosted by the Professional Risk Managers International Association (PRMIA), London
Delivered: 22 January 2025
Note: This is a drafted speech and may differ from the delivered version
Highlights
- Risk managers have a major role in supporting ongoing improvement in implementation of the Consumer Duty.
- Financial resilience, underpinned by the Consumer Duty, sits as one of four focus areas of the upcoming FCA Strategy to help people make informed financial decisions.
- Consumer protection and growth are mutually reinforcing, and through this partnership can strengthen the market.
If your household was anything like mine, the festive season probably involved too much food, questionable Christmas jumpers and, of course, the annual games marathon. In my family, it’s tradition to dig out the games on Boxing Day: classics like Pictionary (surprisingly cutthroat) and Monopoly (which I can only bear to play once a year), and newer kids on the block like Cards Against Humanity (the less said about that one, the better).
But as much as everyone loves playing, I’ve always felt the most critical role isn’t the detective in Cluedo or the banker in Monopoly. It is the Games Master. The one who explains the rules to everyone, steps in when my brother starts making up his own version and makes sure all the players get the most out of taking part.
Without the Games Master, the fun can quickly turn into arguments, or worse – someone flipping the board in frustration and a frosty silence over the buffet.
Of course, running a business is far from a game. It’s high stakes, with real consequences for consumers, firms, and the economy. But much like a game, success relies on fairness, following the rules, anticipating risks and spotting opportunities. Risk professionals like you are the Games Masters of your organisation.
Your insight, foresight and oversight ensure that ambition and success stay grounded in fairness and resilience. Without your vigilant eye, the Jenga tower of trust that holds our financial system together could collapse. This is true, whatever the focus of your organisation. The system doesn’t work without you. And nor can the Consumer Duty, which is the one example area I want to explore with you today.
Consumer Duty: a catalyst for positive change
At its heart, the Duty is about delivering better outcomes for consumers by setting high standards of protection and requiring firms to put their customers' needs first. That is why the Duty was designed to be outcomes-focused – giving firms of all sizes, from sole traders right up to multi-nationals, the flexibility to innovate in ways that suit their size and their client base.
And it is by focusing on delivering those good outcomes for their customers that firms can build trust, safeguard their reputations, boost operational resilience and significantly reduce the risk of costly redress. As a result, we are better positioned to compete, both domestically and internationally.
So the Duty aligns the interests of firms with those of their clients, for the benefit of the system as a whole. A win-win scenario. And we have already seen positive steps under the Duty.
Since publication of our review last summer, we have seen better rates for savers, as well as improved communications from providers to customers. Average easy access rates rose to 2.11% in June – that’s an estimated £4bn a year extra interest into accounts. A great example of how the Duty can genuinely create value for everyone involved.
The Duty gives us a golden opportunity to re-think our regulatory approach and do things better. One example is Composite Consumer Investments.
We know that the PRIIPs disclosure regime inherited from the EU is overly prescriptive, fails to cater for the diversity of the UK investment market, and doesn’t reflect the way consumers buy products today. So after extensive engagement with industry and consumers, we’ve proposed something simpler and more tailored to UK markets’ specific requirements.
An approach that emphasises flexibility and clarity, giving firms freedom to innovate and help consumers make well-informed investment decisions. And this is just one example of where we could simplify regulatory requirements in light of the Duty.
The FCA recently ran a Call for Input to invite feedback on how we could simplify regulatory requirements. We had over 170 responses, so many thanks to those of you who took part.
There were ideas on how we could give you more flexibility to try new approaches, and also suggestions related to how and where we communicate our regulatory expectations. As you might imagine, responses covered diverse views. Some outright contradictory. So as well as answering some questions, it has raised others – both for us as a regulator, and for industry. What would a more pro-growth Handbook look like in practice, and what might it do to the balance of risks in the system? Should we support smaller firms with fewer compliance resources? And how can we make our rules more accessible for firms, so they have the confidence and freedom to innovate without increasing the risk of future redress bills?
This debate around risk is a live one. As we set out in our recent response to the Prime Minister, to achieve the deep reforms necessary to achieve growth, greater risks will be required. We will be upfront about where those risks are when we see them. We know that FCA decisions influence how confident consumers feel and how global investors perceive the UK, so it is important we find the right solutions, not just the quickest ones.
We are carefully considering all the feedback – including valid concerns around the pace of regulatory change and how we supervise the Duty – and plan to publish our follow-up this Spring.
And I want to be very clear that the Consumer Duty is more than a tick list of rules or a once and done exercise; it’s a living, strategic framework. So we will continue to work with firms to get the Duty right in response to practices we are seeing. This is particularly true for smaller firms, who we really want to feel confident in their application of the Duty.
Because far from a Trivial Pursuit, the Duty is a chance to create a regulatory environment where businesses thrive while delivering for their customers.
Strategy 25: Resilience and Growth hand in hand
And that is central to the FCA’s vision for the future of financial services. Our current strategy comes to an end in April, and we are developing our next, which will cover 2025 to 2030.
We previously mentioned the four main themes will be:
- How to help people make the financial decisions that matter most to them or improve their financial resilience.
- Supporting economic growth.
- Tackling financial crime.
- Driving our operational and regulatory effectiveness.
The strategy remains a work in progress. But I want to take a moment to focus on the first of these, and what we mean about people having the help they need.
People inevitably have different financial starting points. For some, it will be a question of managing debt or getting a first bank account; for others it might be saving for a first home or building a nest egg for the future. But while circumstances may differ, some things will remain true.
The decisions people must make are often complex. Arguably, they’ve never been more difficult to navigate. So people need support. That will often come from the finance firms enabling them to access the product or service that meets their needs. The Consumer Duty will play a key role to play in ensuring people can do so with confidence.
Which brings me to growth. Some argue that consumer protection and growth are inherently opposing forces. I disagree. They can and should be mutually reinforcing; two sides of the same coin. Confident, informed consumers are more likely to engage in the financial system, driving demand, innovation and growth. Open finance is just one example. Likewise, growth can encourage healthy market competition and greater choice for consumers, boosting resilience and financial inclusion. It’s a virtuous cycle that strengthens the market overall.
Risk: the key to unlocking growth and resilience
Sitting at the heart of this balance is risk management. Without risk, there is no growth, no innovation, no progress. But we do need to make a distinction between ‘good’ risk and ‘bad’ risk. Good risk is thoughtful, calculated. The kind of risk that drives innovation and opens up new opportunities. Bad risk is reckless, short-sighted and ultimately harmful to us all.
The Consumer Duty provides a framework for navigating that distinction. A lens for firms to assess their products, services and operations to identify and mitigate bad risks, whilst promoting sensible, strategic risk-taking that benefits consumers. And at the same time, a tool through which we can empower consumers, armed with the right information, to make the right decisions for their own risk appetite.
To support the implementation of the Duty and share best practice, the FCA recently published a review of Consumer Duty Board reports[2]. We looked at a sample of 180 firms’ reports, which highlighted some good practices, including clear outcomes focus, high quality data and strong governance processes. But there is clear room for improvement – particularly in analysing outcomes for different customer groups, providing stronger board-level challenge, and evidence of taking effective action.
On board challenge, the good reports we reviewed showed clear evidence of boards requesting further information to demonstrate compliance with the Duty’s outcomes. In one case, a board member challenged the team to provide a clear plan to address issues involving customers with characteristics of vulnerability. It was clear that an action to deal with this challenge was then allocated to a senior member of the management team.
We announced this month that we plan to give firms more flexibility on whether to appoint a dedicated Board Champion for the Consumer Duty. Regardless of whether they do, we expect firms to meet the high standards of the Duty, and expect firms to have strong governance in place to ensure they act to provide good outcomes for consumers.
It puts even more onus on the Board as a whole to challenge their executives, to achieve the best outcomes for consumers.
Strong reports provided specific examples where, when risks were identified, action was taken to address them, and the effectiveness of those actions was evaluated. For example, we saw reports where firms assessed that a product or service was not meeting customer needs, so changes were made to maximise value for the customer.
That included an insurance firm making an optional add-on standard, in line with competitors, and a wealth management firm removing minimum fees from certain product lines.
I think the findings of our review speak to a key theme. And that is the importance of leadership, communication and culture. Everyone in this room today can influence the culture we need to succeed: one that embeds the principles of the Consumer Duty into every decision, every process, every interaction.
Conclusion
Because the Duty isn’t just another policy, it’s a call to action. An opportunity to build a thriving financial system that combines growth with resilience, innovation with accountability, ambition with trust. But it will require a collective effort.
As risk managers, your ability to anticipate challenges and ask the tough questions will impact how effectively this Duty delivers on its promise. So please: embrace your role as the Games Masters of your organisation, leading with integrity, driving strategic risk-taking, and never losing sight of the bigger picture.
Let’s not just play the game, let’s shape it for the better.