What does the new Consumer Duty regime mean for Customer Experience within the financial services sector?


Ah, I remember my first foray with Treating Customers Fairly (TCF) back in 2012 when working for a Housing Association, but it wasn’t until 2014 that I really got up close and personal with the Financial Conduct Authority (FCA). I was acting as the Deputy CEO of a newly founded Debt Advice Charity and my first job on the to-do list…get the charity FCA authorisation.

What a mission that was. I recall binders full of paperwork, hundreds of questions to be answered, masses of evidence to be collected and weeks of blood, sweat and tears to prove that we were fit for purpose. We did it, we received FCA authorisation and the charity started its journey. Looking back at that time, the authorisation process felt like a big barrier, a hurdle we need to jump, and heck, we were just a small charity, a mere speck of sand to the FCA, compared to the looming sandcastles that bigger financial institutions presented. TCF felt like a burden, with boxes to tick, and extra admin. I wonder how many organisations still see TCF that way, and will see the new Consumer Duty Regime (CDR) that way?

Now, more than 10 years on, although I don’t see enormous differences between TCF and CDR, my views have changed. I no longer see the requirements as a barrier or burden but as a foundation for the customer experience a company should provide, and with July’s CDR launch, I’m sharing my thoughts on what it all means for customer experience in the financial services sector.

Top-Down Customer Experience

So firstly it needs to be pointed out that CDR is designed to increase consumer protection by improving the standards of conduct for firms and by embedding customers’ interests into the core mission and goals of today’s financial services firms.

As a customer experience consultant, reading those words, “embedding customer interests into the core mission and goals” is a beautiful sight. This means at the highest level of the organisation, customer experience needs to be imprinted, and there needs to be a strong Customer Experience Strategy in place with actions driven by customer data-led decisions.

Many companies will claim to already do this, but for those who are still just treading the surface, CDR will provoke a more robust approach. Why? Because CDR places a significant emphasis on understanding the customer through the collection and use of insight and this collection and use, needs to be demonstrated.   

Insight, Insight and more insight

I believe this focus on insight to be the most significant feature of CDR’s provocation of enhanced customer experience provision. 

When considering a company’s customer experience maturity, the use of insight is usually a good indicator. Whilst many organisations are great at collecting data, few are proficient in understanding (analysing) and even less so in using it to evolve the service and experience they deliver. 

CDR could be a strong instigator in moving companies along on this journey as some of the CDR’s regulatory requirements include:

The list goes on. 

It’s clear that the FCA want to ensure firms are acting on knowledge and insight over assumptions and bias and they provide guidelines which specifically set out target data for this requirement, including analysis of customers’ use of products and services; root cause analysis of complaints; customer retention data; abandoned claims analysis; first contact resolution rates; average wait times; internal quality assurance; customer call listening recordings; satisfaction surveys, and net promoter scores.

Personally, I’d add Customer Journey Mapping insight to this list too. Nothing quite brings all of the above criteria together in a human-centred, holistic way than following, in granular detail, the experience of your customers.

Outcomes first

Who knew that the FCA are trend followers?

For those companies who are ahead of the game in terms of customer experience, they are leaning into metrics that measure customer outcomes rather than, or as well as, measuring service levels. Where we traditionally see Key Performance Indicators (KPIs), the more customer experience mature companies use Customer Performance Indicators (CPIs). KPIs measure efficacy and efficiency whereas CPIs measure what impacts how the customer thinks and feels about a company (what’s important to them).

The FCA has jumped on this bandwagon (hurrah), with CDR requiring a new consumer-outcomes-focused approach.

The guidance sets out the expectation that firms can understand and evidence the outcomes that their customers have and are experiencing. It also notes that should a firm outsource elements of its consumer support then it remains responsible for ensuring that the support provided meets the Duty standard.

This outcomes-focused approach wraps neatly around everything I’ve already mentioned, the recognition and demonstration of customer outcomes should influence how the customer experience strategy is designed and should be supported by the enhanced approach to customer insight. Ultimately, focusing on the outcomes of customers should evolve the processes and policies a firm uses to meet customer needs.

In summary

Although on the surface, TCF and CDR look very similar, I see the new requirements providing an extra layer of attention to customer experience which should be welcomed. Yes, it may create some more administrative effort but there are amazing providers out there, like Evaluagent, who can take the effort out of some of those governance tasks (Check out SmartScore, the Revolutionary Auto-Scoring Feature for Contact Centers ). Companies should also lean heavily into their customer experience teams for support in adherence to CDR, most of what CDR asks for should be pretty much standard practice for any proficient and supported customer experience design, delivery and insight team.

Ultimately an improved customer experience is good for business, so the CDR’s helpful hand towards that is a no-brainer, right?

For further reading on Consumer Duty Regime, check out Evaluagent’s Whitepaper, which can be found here.

Happy CX-ing,

Katie Stabler
By Katie Stabler
Katie is a Cheshire based customer experience specialist and published author, dedicated to cultivating high-value customer experience through data, design and culture. Her work is driven by the principle “Make your bed, and then make their day!”, meaning get the basics right and then create those ‘wow’ moments! She has spent over a decade in experience design working within both the not for profit and commercial sector and now runs her own customer experience consultancy, CULTIVATE Customer Experience by Design.

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