If you thought Consumer Duty would be an initial tick-box exercise you just have to get through, you’d be wrong.
Nisha Arora, Director of Cross Cutting Policy and Strategy at the Financial Conduct Authority (FCA) has gone on record to emphasize that Consumer Duty will not be a ‘once and done’ exercise. That means you need to prove you’re not just doing right by your customers, but that you’re using all the available tools and data to ensure you’re continuously improving.
In 2024, there are still some major tasks to be done, as well as considering how you can demonstrate that all-important improvement. We outline everything you need to know below.
What should you be working towards for 31st July 2024?
Since closed products aren’t available to new customers, you won’t have to identify a target market or develop a distribution strategy like you did with your implementation for open products. That said, the Duty is still very important – you need to do a thorough assessment to ensure your closed products deliver the right outcomes for existing customers.
Questions you should be asking include:
- Why was the product closed?
- Could any aspects of the design of closed products lead to foreseeable harm or frustrate customers pursuing their financial objectives?
- Are customers with closed products receiving the support they need, when they need it, as well as communications that they can understand?
- Do closed products offer fair value? Are the benefits that those products deliver reasonable compared to the price and the cost to consumers?
Make sure you’re on track to meet that deadline! Prioritize your work, uncover which areas present the greatest areas of harm and where your gaps are.
First Board reports
Annual Board reports also form a key part of compliance to Consumer Duty. This is an internal governance exercise, but the FCA may also ask to see Board reports to ensure they’re working as intended.
On a recent webinar, Nisha Arora explained that Boards should be challenging firms and steering them towards continuous improvement for all cohorts of customers. The FCA will assess how far Boards have pushed firms to do better, as well as looking at the data and evidence companies are using to demonstrate positive consumer outcomes.
The FCA will then feed back on Board reports more widely to help drive good practice across the industry.
Beyond the deadline
The idea of Consumer Duty not being a tick-box exercise stems from the FCA’s emphasis around continual review and challenging firms to really deliver on what customers need – and go even further to delight them.
This doesn’t just require commitment, but evidence. Between Board reports and demonstrating compliance, firms will need to have proper systems in place to collate data, analyze it and identify next steps as a result.
That means contact centers will need to have water-tight processes and paper trails to effectively monitor how far they’re meeting the desired outcomes, where they’re failing, and how to improve. evaluagentCX can help you do just that with
What does good look like?
Some companies have been frustrated by the lack of stringent criteria around Consumer Duty. As an outcomes-focused regulation, it hasn’t always been easy to understand what true compliance looks like. Nisha Arora explains that firms should be looking to:
- understand their consumers and their customers’ needs, their customer characteristics, and in particular those in vulnerable circumstances
- use data properly to understand their customers, to identify and spot problems before they occur and address them and get them right in the first place
- demonstrate proactivity in dealing with problems as well as proactivity around continuous improvement
Of course, Consumer Duty is all about improving the customer experience – so what does good look like from the customer’s perspective?
The main thing is having confidence and trust in financial services. That’s achieved by customers being able to make choices that are right for them, by having access to information that empowers them. The FCA’s hope is that this should also facilitate greater innovation and healthier competition – a win-win for not just customers, but the sector as a whole.
Get to know Consumer Duty
Watch our webinar with leading law firm Burness Paull to understand how to tackle consumer duty head on with quality assurance at the heart of putting the customer first.Watch the webinar