On 31 July 2023, the FCA’s new Consumer Duty regulation will officially kick in after years of consultation and planning. The new rules aim to ensure companies place customers’ interests at the heart of operations and encourage fair competition. They represent a fairly dramatic shift from the way many firms currently operate.
Engage Hub’s Mark Grainger and Colm Dowd joined NayaOne’s Oli Platt in an on-demand webinar to discuss Consumer Duty and share compliance advice.
In this blog, we’ll share 5 takeaways from that discussion.
1. It all comes down to data
At its core, Consumer Duty is about centring operations around customers’ needs. This means firms need to understand:
- Who their customers are
- What’s in those customers’ best interests
- How to provide robust evidence to demonstrate the organisation is prioritising them
High-quality data is essential to all of these undertakings. By collecting and analysing past and present data, firms can get a clear view of who their customers are as individuals, tailor offerings to them and proactively spot opportunities to support them.
2. Real-time analysis is key
Data collection is only the start. To comply with Consumer Duty, firms must be able to demonstrate they’re using data proactively to deliver positive outcomes for customers. That means data needs to be analysed in real-time, so you can immediately act on trends.
Indeed, a shift from static to dynamic insights is a key obligation under the regulation. To hit the mark, firms need to move from quarterly slide decks and monthly reports to intelligent dashboards with the latest view.
For some, this will be a natural extension of existing customer journey orchestration workstreams. For others, it will highlight the need to invest in more sophisticated technology.
3. Focus on fairness
Analysing real-time data isn’t just about understanding customers. It’s also about ensuring you allocate resources fairly – a key tenet of Consumer Duty.
For example, if you notice that only 60% of customers are completing mortgage journeys, you should try to improve that outcome. But taking a ‘fair approach’ means you need to take a holistic approach, not just look at improving certain journeys (and therefore helping certain customer groups).
Technology like Engage Hub’s real-time Customer Journey Tracker can support this. Customer Journey Tracker brings together data from across journeys and touchpoints – be it CSAT scores, abandonment rates, completion rates, contact rates or customer sentiment analysis – and highlights all areas with issues. That way, you have a comprehensive source of information to help you prioritise remediation.
4. Protect the vulnerable
Because Consumer Duty is about protecting customers, firms must pay particular attention to how they treat their vulnerable customers.
A vulnerable customer is anyone who’s more susceptible to exploitation or who may need extra support to use or understand a service. This may be because they have an accessibility need or because they’re part of a more vulnerable socioeconomic demographic.
To prepare for Consumer Duty, organisations should:
- Develop clear policies and procedures for identifying vulnerable customers
- Provide training to ensure staff can recognise and respond to vulnerability
- Consider using technology, such as AI-powered tools, to identify and support vulnerable customers
5. The deadline is just the start
There’s a lot of focus on the July compliance deadline, but that deadline should be viewed as the start, not the destination.
Consumer Duty is designed to bring about long-lasting, positive change. Decisions about data, technology and ways of working should be made with that in mind – and with recognition that compliance will be an ongoing process.
Consumer Duty presents a significant challenge for organisations operating in the financial sector, but it’s also an opportunity to build a stronger, more customer-focused business. By taking steps to improve data governance, focus on customer outcomes, protect vulnerable customers and invest in technology, firms can position themselves for success in this new era.
For more support with Consumer Duty compliance, watch the full webinar on demand or get in touch.