Designed to raise standards and drive clarity in consumer protection across financial services, Consumer Duty introduced by the Financial Conduct Authority (FCA) is driving positive change throughout the industry. For UK financial services organisations, the new regulations herald a cultural shift towards customer-centricity with greater emphasis on best outcomes.
Better outcomes for customers can only be good for business. Handled well, Consumer Duty presents the opportunity to innovate and by developing a product and services portfolio that offers customers what they really want, strengthen your competitive advantage.
In your quest for ‘customer-first’ Decision Focus suggests you prioritise the following five key areas of focus:
Priority number one is to know your customer – gain a clear understanding of your customers’ needs and preferences. This involves gathering information about their financial situations, goals, and risk appetites. By understanding your customer base, you can segment them into cohorts according to their needs, which you can then develop and refine products and services to meet.
To achieve this, you need to have robust systems in place for collecting and analysing customer data. You should also conduct regular surveys or focus groups with customers to gather feedback on their experience with your products or services, and especially any unmet needs they may have.
The second key consideration is product design and governance. Does your product range truly reflect the needs of your target market? Our advice is to put yourself in your customers’ shoes and question whether your products really offer value or hold any undue risks or harm for consumers.
You’ll need to establish clear processes for designing new products, including risk assessments, testing, and ongoing monitoring of performance against expectations. Review existing product lines regularly to ensure they remain appropriate for their intended audiences. Again, data holds the key to your organisation’s ability to innovate and compete.
As you’ll be aware, Consumer Duty places new emphasis on the need to provide clear information about your products and services so that consumers can make informed choices.
This includes providing key information upfront such as fees, charges, terms & conditions etc., through easy-to-understand language across all channels of communication (including online). Additionally, where there are changes made in the terms & conditions of a product/service, timely notification should be given well before the implementation date so that customers can take an informed decision whether they want continue using the product/service or not.
Question: how well do your current systems support your ability to enhance customer communications? Are you relying on data held in spreadsheets or siloed ‘data lakes’ spread across the business? Centralisation could dramatically improve essential customer communications.
The fourth priority is sales process transparency; it’s important that customers fully understand what they are buying when purchasing a product or service from you. This includes providing clear information about fees, charges, and any other costs associated with the product.
There should be no ambiguity. For example, if a customer is offered a promotional rate for an initial period, you must clearly explain when this rate will end and what the new rate will be thereafter.
Ask yourself, how well is sales process information managed currently? Do your teams need to search through endless e-mails, spreadsheets and documents, or multiple disparate systems, to find the data they need? Imagine resource efficiency that could arise from a governance tool offering a ‘single source of truth’.
How your business responds to customer dissatisfaction and complaints is a key obligation in Consumer Duty. It’s important to have a robust complaints-handling process in place to address any issues raised by customers promptly and fairly.
You should establish clear procedures for receiving, investigating, and resolving complaints and, ensure that all staff members are trained on how to handle complaints effectively for optimal customer satisfaction.
From accurate customer complaints record-keeping, to determining your product and services roadmap, the common denominator to all five priorities is data – specifically, the need for it to be high quality and easily accessible; the basis for sound decision-making.
See how Decision Focus’ Product Governance module can help you address the challenges of Consumer Duty, harnessing data to demonstrate your commitment to treating consumers fairly while enhancing brand reputation through positive experiences.
If you’d like to identify non-viable products earlier, evidence proof of value, improve communication, build trust and loyalty, mitigate risks, respond rapidly to issues… and much, much more, why not request a demo?