How firms can apply Consumer Duty to Existing Services

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byChisimdi Nzotta

It’s no longer news that the FCA announced the new Consumer Duty of Care (CDC) proposal to help provide a higher standard of service and fairer outcomes for customers. While it may be easier for advice firms to make new services compliant with the regulations, there’s still a question mark over existing services. Does the consumer duty proposal mean existing services should be discarded and new ones created or is a refresh sufficient for compliance? 

 

It will be quite a challenge for firms that have a substantial number of legacy products and services to ensure they’re compliant, retrofitting new guidance before the April 2023 deadline. However, there are some first steps firms can take to meet consumer duty standards:

 

Make changes in products and services where relevant to ensure a fairer outcome

 

The FCA announced in the consumer duty guidance that consumers should receive products and services fit for purpose, provide fair value, understand how to use them, and are supported to do so. Advice firms must ensure that existing products and services align with these guidelines.

 

To be compliant before the deadline in April 2023, firms need to check that their services are of a high standard, relevant to the customer, and provide value. In situations where this is not the case, firms must review the service to ensure changes are made, terms of service are updated, steps are taken to make it relevant to the customer, and ensure consumers understand exactly what they are buying. 

 

While a product or service may result in a positive outcome for some customers, others may not have the same experience with the same product. Therefore, it’s necessary to review each customer and ensure the service they are offered is the most relevant to their needs and, if it’s not, make required changes. 

 

Conversational analytics provides firms with a clear-cut and efficient way to achieve this. What better way to ensure services provide fairer outcomes if not by confirming from the consumers themselves? 73% of consumers say a good experience is key in influencing their brand loyalties – PWC. With platforms like Aveni Detect, advice firms can monitor 100% of their consumer calls and identify customers who aren’t getting a fair outcome from their service. This equips them with the information needed to make changes and offer consumers a better outcome aligned with the FCA’s Consumer Duty of Care.

 

Review customers to ensure their circumstances are still relevant for the services provided

 

In striving to ensure that existing services align with the consumer duty proposal, firms must be cognizant that a service may be providing a fair outcome to consumers for a while and change along the way. Therefore, customers should be continually under review to see if there is a change in their circumstances and if their current state is still relevant to the services provided.

 

An example is a customer who suddenly becomes vulnerable after an unexpected life event. There’s a high probability that services that gave them top value in the past may not be suitable anymore. As a result, it’s non-negotiable that firms set a framework for regularly reviewing customers, checking that the services are still relevant, and if not, providing updated services that align with their circumstances and provide a fair outcome. Using a point-in-time assessment is no longer good enough. 

 

To achieve this by April 2023 and evidence it, technology like speech analytics is quickly moving from a ‘nice to have’ to essential for firms to become compliant. Natural Language Processing and Artificial Intelligence enable machine-based assessments of all interactions, provide greater assessment accuracy, and can flag situations that indicate changes in consumer circumstances. Intelligence surfaced through speech analytics can give companies insights needed to ensure products and services are tailored to customer requirements over time, not just at the point in time it is sold to them.

 

Extend existing policy on vulnerable customers to consider a wider group of customers

 

The broader the range of customers that advice firms accommodate in their processes, the higher the chances of providing solutions at an individual level. However, putting all customers in one wide spectrum makes it easy to overlook individual needs and situations and offer services that aren’t the highest standard and do not provide the best outcome. 

 

It’s important to segment consumers, broaden existing vulnerability processes to better identify and serve customers, and review services to align better with their needs. For example, speech analytics provided by platforms like Aveni Detect surface trends and insights on a population level, allowing firms to better understand their customers on a more segmented basis. Firms can feed this information to product and service teams and Quality Assurance departments to improve customer offerings.

 

Applying Consumer Duty of Care to existing services is mandatory, and something that firms should look at doing now if they are to meet the deadline. This clearly daunting task can be made much easier if firms embrace technology that allows them to gather feedback directly from the customer’s voice, monitor complaints or expressions of dissatisfaction, and uncover trends and insights that impact product and service development.  By turning to technology to help meet the Duty, firms will also find themselves gaining a clear competitive advantage by building trust with consumers and improving customer loyalty.  A win-win situation. 

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