CRO Consumer Duty survey findings: Customers at the heart of your business? Now is the time to prove it.

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byChisimdi Nzotta

We surveyed +80 Senior Compliance and Risk Officers from across the UK’s Financial Services sector to find out their top priorities and investment plans for Consumer Duty and how they’ll meet the tightening data-driven expectations of the FCA. See full results here.

 

  • Survey says 3 out of 4 (67%) financial services executives do not focus enough on customer outcomes which are crucial to Consumer Duty

 

  • However, 83% of CROs believe their organisations will commit the resource needed to meet Consumer Duty

 

  • Technology spend is a key priority for 78% of businesses, along with staff training (89%) and automation (70%) to meet Consumer Duty

 

Financial services businesses need to act now to prove that they really put the customer first or risk non-compliance with Consumer Duty regulation. With 1 in 4 CROs (23%) estimating that their compliance costs will increase by over 50% and 2 in 3 (67%) estimating it will increase by up to 50% as a result of Consumer Duty legislation, the emphasis on consumer outcomes as a significant business metric is very apparent. Therefore, it is  an issue that must be taken more seriously at Board and executive level than it currently is.

 

Of the Compliance and Risk Officers interviewed, 59% stated that customer feedback does not sufficiently affect business decision making due to a current lack of monitoring and analytics abilities. Less than 1 in 4 CROs (19%) were confident that they can accurately identify vulnerable customers during a call, with 40% finding it difficult to monitor and analyse customer vulnerability and complaints at all.  Despite FCA warnings that complaints data is not a valid indicator of customer outcomes, it continues to be a metric deployed by CROS, with 93% surveyed saying that they still use it. 

 

Compliance and Risk Officers

 

The importance of monitoring, analysis and quality assurance are paramount to deliver the customer-centric components of Consumer Duty legislation. Investment in compliance must be made to achieve this and our survey suggests that this is gaining importance. Over 83% of those surveyed believe their companies will commit resource to meet Consumer Duty, but there are still some questions about where money should be invested at a senior level. 

 

At the top of the investment priority list for Consumer Duty compliance CROs place staff training (89%); technology to monitor customer data (77%); and ability to automate the quality assurance process (70%). The investment in technology was considered much more imperative compared to a 41% desire to hire more staff across quality assurance and customer service (41%). It was estimated that the cost of compliance would be higher investing in staff than investing in technology.

 

Joseph Twigg, Aveni CEO explains, “Consumer Duty brings it all back to the customer. The outcomes for customers will be the key metric on which all financial services businesses will be measured. Quality and Risk Assurance are no longer tick box exercises. They will require a crucial role for CROs or Risk and Compliance Managers to meet the demands being placed on them.  Technology is arguably the differentiator that will enable them to do this and enhance the regulatory and risk functions. This brings a whole new level of empowerment to the risk manager role and gives them the opportunity to maximise their value and effectiveness. 

 

“With large investments being predicted and required to meet Consumer Duty, it is vital that they are able to deliver, demonstrate and prove truly positive customer outcomes. Arguably the risk manager has the potential to derive far greater business value through technology and should have the opportunity and authority to select and assess the systems being used. Without this there is a real chance for non-compliance and the seriousness of those consequences – financially and even legally – should not be under-estimated.”    

 

The new Consumer Duty regulation from the FCA requires firms to act to deliver good outcomes for retail customers, to act in good faith, avoid causing foreseeable harm, and enable and support customers to pursue their financial objectives. 

 

Our AI based platform analyses all customer interactions and mitigates against a range of risks from conduct and complaints to customer vulnerability. This elevated level of risk insight will become essential in meeting data-intensive demands of Consumer Duty. The AI-enabled technology gives businesses an improved level of understanding of their customers and outcomes and puts data-driven technology at the heart of their operating model. 

 

In addition to Consumer Duty compliance, Aveni Detect helps companies transform efficiency and automation of their customer operations, while improving customer experience. It uses feedback to inform product and service development, and enhance staff coaching experiences.  Aveni Detect also provides actionable Consumer Duty outcomes for training effectiveness, outcome testing, complaints handling all the way to data-driven thematic reviews and enhanced management information.

 

The research involved 83 senior risk and Compliance executives from FCA-regulated businesses and was carried out by Research in Finance on behalf of Aveni between October and November 2022.  For full results see here.

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