‘Our data shows providers have been busy making sure that their products are fit for the consumers they’re being sold to’, says head of insight and consulting

The FCA’s Consumer Duty clampdown has triggered general insurance (GI) providers to increasingly use product benchmarking tools, according to financial information, ratings and fintech business Defaqto.

In a statement released today (3 May 2023), the firm reported an 81% increase in automated reporting from its financial product database, with providers using dynamic product benchmarking to see how products compare.

The rise came in the period since the FCA confirmed its plans to bring in a new Consumer Duty in July 2022.

In the same period, Defaqto also revealed a 40% increase in reports created by GI providers who use its database.

The database aims to provide users with “comprehensive product and industry intelligence” and contains 43,000 financial products and four million product features across GI, life and protection.

Defaqto’s head of insight and consulting (banking and GI) Brian Brown said the “significant increase in reporting volumes shows that firms are embracing the changes that the Consumer Duty brings”.

He added: “The 81% increase we’ve observed refers to the regular, automated reports that providers use to monitor new products that have been launched, products that have been updated and any that have been withdrawn.

”We’ve also seen an increase in the number of recipients receiving these schedules, which indicates that the data is being used by more people more widely within each organisation.”

Duty deadline

The FCA’s Consumer Duty will come into force on 31 July 2023 for new and existing products or services that are open to sale or renewal – this has been extended to 2024 for closed products and services.

Brown added that Defaqto is currently working on a new product to further help its customers access and rank product features.

He said: “The new rules and guidance shared by the FCA are in part designed to ensure that products and services are designed to meet the needs, characteristics and objectives of a specified target market.

“Our data shows providers have been busy making sure that their products are fit for the consumers they’re being sold to, by creating target market statements for every product.”