Why firms need to be challenging themselves on price and value
In a matter of days, the Consumer Duty’s first critical deadline of having Implementation
Last week, Chief Operating Officer and Executive Director at the FCA, Emily Sheppard spoke about the Duty at the CISI/Financial Planning Conference 2022 and explained ‘At the FCA, we too are moving towards becoming a more innovative, more assertive and more adaptive regulator … We are transforming into an organisation driven by outcomes and clear end goals that is investing in both data and people.’
This vast shift in the FCA becoming an outcome-based regulator is set to transform how compliance is evidenced – in practice not just theory. Here, TCC Associate Director Neil Dethick considers the fourth and final Duty outcome, consumer support, to conclude our deep dive into our outcome insight series.
To help customers purse their most suitable financial objectives, support must be on hand throughout their customer journey. How this support is applied can vary, from phone and email to in-branch and webchat. The FCA does not intend to prescribe which channels are deemed most suitable but expects firms to demonstrate and ‘provide effective support to their customers needs’.
Neil explains: ‘Now more than ever, there are a multitude of options available to firms to support their customers. When deciding what assistance to provide there are two key points to consider.“
“Firstly, the channels available should meet the needs of the customer. The FCA cites a poor practice example where an individual was unable to read braille or large print and asked for communications via email instead, so they could adjust to suit their own readability. Despite this request, the customer continued to receive paper communications, thus the firm was seen as providing inadequate support.”
‘Secondly, if a product has been designed for a specific market, such as a tech-savvy demographic, firms need to be explicit in their communications that the support available for such products is only accessible via certain outputs and may not suit the needs of everyone.’
Being mindful that a consumer’s needs can change at any time requires firms to be adaptive and flexible in the support they provide.
‘There will be a variety of factors that could affect the needs of a customer at any time. A change in financial situation may mean that a customer can no longer access support in a way which they once did, such as if they lose mobile access. Where a customer’s circumstances alter, the FCA will expect the firm to support them, including exiting the product if that’s deemed appropriate,’ Neil comments.
In addition, by law, firms must make reasonable adjustments for disabled customers under the Equality Act 2010 whilst ensuring they don’t disadvantage any groups, particularly those with vulnerable characteristics.
Amidst the cost-of-living crisis, there’s likely to be more consumers struggling with payments and meeting their financial objectives, so the FCA will be keen to see appropriate support for those in this situation.
‘In June this year, the FCA wrote to 3,500 lenders to remind them of the standards they should be meeting to support their customers through this cost-of-living crisis. They’ll be looking to build on these standards under the Consumer Duty,’ says Neil.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA outlined in June: ‘Many consumers are feeling the impact of the rising cost of living in their personal finances and we expect this to increase over the next few months. Early action is important for those struggling with debt. We need all firms to get the basics right and provide good quality support. Where we see more serious wrongdoing, we are already acting to ensure these firms improve.’