Consumer Duty - how’s it going so far?
Who has told the customer?
Consumer Duty is now live and months, possibly years of work that has been done by financial institutions across the UK should now be giving these businesses a certain sense of satisfaction, that once again they have made their business ‘safe’ from FCA scrutiny. A headline in a recent Sunday Times read ‘Better Service, Fewer Rip-offs – new rules aiming to fix our financial woes’ which must make you wonder…who has told the customers/consumers about how important they have become?
It is now mid-August 2023 and Consumer Duty is a BAU expectation. A quick glance through social media and you will find countless businesses, large and small, hailing this fresh approach as the way forward. But the emphasis of many focuses on topics like:
Transparency of products and services.
How our business has developed to manage new regulation.
Our simple guide to help your business understand Consumer Duty.
I did however read a few comment chains that struck a chord:
‘So much has gone into preparing our business, could we have failed immediately by not truly engaging our customers in the whole evolution?’
‘How will the consumer know they have been let down? Or had a service or product that does not deliver to these new ‘higher’ standards?’
With Consumer Duty now a reality the question becomes - how can you create a business environment that delivers these expectations and that is, most importantly, recognised by the consumer?
The 4 consumer outcomes are summarised as:
Products and services
Aimed at ensuring products are designed to meet the needs, characteristics, and objectives of a target group of customers and are distributed appropriately.
Price and value
The FCA wants all consumers to receive fair value. This is not just about price but ensuring that there is a reasonable relationship between the price paid for a product or service and the overall benefit a consumer receives from it.
Consumer understanding
Designed to ensure that firms support and enable consumers to make informed decisions about financial products and services. Firms will be required to provide information consumers need, at the right time, and presented in a way they can understand.
Consumer support
Requires firms to provide a level of support that meets consumers’ needs throughout their relationship with a firm. Firms will be required to design and deliver support to retail customers in a way that meets the needs of all retail customers, including those with characteristics of vulnerability.
As a business you must now keep asking yourself against each outcome: ‘how will our customer know?’
This needs approaching as both an internal (staff/business) task and external (consumer facing) activity.
Internal Tasks
Accept and acknowledge at every opportunity that Consumer Duty has only just begun and has not just arrived. Remember that Treating Customers Fairly (TCF) had a 15-year journey until it evolved into ‘Consumer Duty’.
In the short to medium term give it pride of place as part of your staff training and competence scheme, after all ‘amateurs practice getting something right ONCE, professionals practice so that they NEVER get it wrong’.
Review and improve, quality assurance has never been more pivotal. Make time to regularly review your business against each Consumer Duty outcome and simply challenge yourself with the question ‘how will our customer know?’
External Activity
Consider adopting this simple maxim: “Don’t make decisions on behalf of your customer, that are NOT yours to make”.
One of the biggest challenges we have as ‘experts in our field’ is taking, making or driving decisions on behalf of our customers. Now it would seem the approach is ‘provide the opportunity for customers to make those decisions for themselves with your expert support’.
To make this happen:
ENSURE your customers are making choices based on all of the facts. Ask the right person, the right question – get the right answer and clarify.
ACCEPT that it is NOT your job to exclude any products or services based on what you ‘think’ you know about the customer. Always demonstrate your true value – ensure the customer is fully aware of the solution(s) you can provide – without constraint.
THINK £££ last. Based on how Consumer Duty has been constructed this seems to make most sense, however the moment you put a commercial value on an interaction you have shifted the focus, if only slightly, away from the outcome. If that shift becomes more than slight then the consumer becomes secondary.
Insurance Support Solutions Ltd can provide business support and guidance to support the successful answering of the question ‘how will our customer know?’ ensuring:
Raised customer awareness
Customer trust and confidence
Adherence to the 4 outcomes
Staff competence
Ask us about what is involved, and we will work with you to provide a bespoke solution that gives you the confidence and conviction to embrace Principle 12 and its intended positive impact on customer experience.
And Finally…
I was at the customer-service desk, returning a pair of trousers that were too tight. The assistant asked, “Was anything wrong with them?”. “Yes,” I said. “They hurt my feelings and damaged my self-confidence.”
