How to evidence consumer duty actions and ensure good consumer outcomes

The Financial Conduct Authority's (FCA) new Consumer Duty regulation is one of the most significant shifts in UK financial services. The intention for companies to put the client's needs first is admirable, but evidencing actions can be a challenge. 

Putting the client at the heart of the business means ensuring every procedure, process, and system keeps the consumer in mind.  

Financial services firms that must be Consumer Duty compliant, but also want to build loyalty and drive profitability, will need a customer experience (CX) solution. Keeping clients is critical in a competitive environment, so a CX strategy is imperative.  

At insight6, our unique and tailored CX solutions and local specialists transform businesses, earning us a reputation as the partner of choice for many financial services firms. Here we share our three-step CX process to the FCA's Consumer Duty.

What is the new Consumer Duty? 

Consumer Duty is a regulation introduced by the UK financial regulatory body, the Financial Conduct Authority (FCA).  

There are three parts to Consumer Duty: 

  1. Consumer Duty Principle. A higher consumer protection standard for financial firms. 
  2. Cross-cutting rules. Overarching requirements for setting standards of conduct across all areas of a firm's retail financial services activities. 
  3. The consumer outcomes. A detailed set of requirements applies to four client/customer relationship aspects. 

Putting the client's needs first is the cornerstone of Consumer Duty Principle - it is a good business practice to ensure good consumer outcomes. So, a properly considered and managed customer experience (CX) programme is critical to regulatory success. 

What are the three cross-cutting rules of Consumer Duty? 

 The Duty's three cross-cutting rules set the overarching requirements setting standards of conduct expected across all areas of a firm's retail financial services activities. 

  1. Act in good faith 
  2. Avoid causing foreseeable harm. 
  3. Enable and support customers to pursue their financial objectives.  

What are the four outcomes of Consumer Duty? 

The Four Outcomes cover critical elements of the firm-customer relationship.  

Specifically, the outcomes require firms to ensure that products and services meet client's needs, that pricing is transparent and offers fair value, and that consumers receive communications to understand and get the support they need. 

  1. Products and services outcome. To ensure fit for purpose. 
  2. Price and value outcome. A focus on transparent pricing and fair value. 
  3. Consumer understanding outcome. To enable clients to make informed decisions. 
  4. Consumer support outcome - good quality support and after-sales care. 

Obtaining client feedback is one of the best ways to evidence your actions towards achieving the Four Outcomes. A robust CX strategy will provide you with insights to improve good consumer outcomes, become Consumer Duty compliant and increase your profits. 

Managing feedback is a crucial part of the CX process, so working with the right partner is paramount to evidencing your Consumer Duty actions. At insight6, our unique icx6 philosophy and partnership model is your guarantee of great service.

When does Consumer Duty take effect? 

There are five milestones to prepare for the new milestones to take effect.  

The FCA released the final guidance on its consumer duty at the end of July 2022. By October 2022, firms had to agree on their implementation plans. Now, firms must work towards achieving milestone three - completing reviews to meet the outcome rules. 

Duty rules start for available products and services on 31 July 2023, then a year later (31 July 2024) for closed products and services. 

You can view the detailed Consumer Duty timeline online. 

What does Consumer Duty mean for the industry?  

Consumer Duty aims to ensure financial firms take responsibility for operating in their client's best interests and treating them fairly. Financial services firms must look beyond compliance to strategy, data and technology to achieve this. 

To evidence their intentions and actions, firms must be client-centric, consistently reviewing practices and asking for feedback across multiple client engagement touchpoints.   

Consumer Duty is an opportunity to deliver a consistently positive client experience which will add real value to the business over the long term. Investing in a robust customer experience (CX) strategy and tailored solutions will put clients at the heart of the business to ensure good client outcomes whilst building loyalty and driving profitability. 

How to evidence Consumer Duty actions and ensure good outcomes 

Putting the client at the heart of the business means ensuring every procedure, process, and system keeps the consumer in mind. Repeatedly reviewing your business and asking your clients and staff for feedback is critical to proving your actions and becoming compliant.  

At insight6, we work with hundreds of happy clients to put the customer first by building a robust CX strategy to improve the customer experience, build loyalty and drive profitability.  

Our three-step CX process to the FCA's Consumer Duty will help financial firms evidence their actions and ensure good client outcomes. 

insight6 three-step CX plan to Consumer Duty compliance: 

  1. Putting the client at the heart of the business - the customer journey 
  2. Embedding a client engagement programme - regular customer feedback  
  3. Creating a client-centric culture - training, mentoring, and coaching 

How to put the client at the heart of the business 

We recommend you map the client journey alongside where the business currently sits within the new Consumer Duty requirements.  

You can map the client journey internally, but using an independent facilitator will ensure an accurate picture of your business through your client's eyes. 

Mapping the client journey will enable you to look at multiple consumer touchpoints. From how your teams handle initial enquiries, respond to clients, provides information requested, or respond to messages right through to effective complaint management and encouraging client referrals - the list of things you can review is endless.   

How to embed a client engagement programme 

To embed an effective client engagement programme, you need data and feedback. 

Ideally, data and feedback based on actual customer experience reviews (also known as mystery shopping) as well as other client feedback 

The FCA will likely want to see client trust, confidence and fair value measured as a bare minimum. Still, Consumer Duty is an opportunity to delve deeper into your client's experience and achieve better results. 

Consistently asking for, reviewing, and acting on feedback will help evidence your Consumer Duty actions to become compliant. Importantly, embedding a client engagement programme will enable good customer outcomes by helping to improve your overall client experience. 

The Duty emphasises supporting clients to make informed decisions on financial products and services, especially safeguarding vulnerable clients.  

Careful consideration of the client journey and evaluation of every touchpoint with the client will enable a firm to evidence how it regularly tracks any changes to a client's situation and detail fallback plans.  

How to create a client-centric culture 

Creating a client-centric culture is imperative to become Consumer Duty compliant.  

Your employees play a pivotal role in delivering your product or service. Workplace culture is part of everything an organisation says and does, making it difficult to transform even when necessary.  

In the current climate, the working environment is constantly changing and challenging to predict. Plus, the new regulation will likely bring new challenges for your team. It's essential to know the impact it's having on your staff.  

Measuring employee engagement and giving the proper support, training, mentoring, and coaching will be critical to ensure your firm and staff meet Consumer Duty requirements. 

Creating a great working culture within your business ensures that your team can give the best experience for your clients. You need access to fast, actionable feedback from your team that makes them feel highly motivated, engaged and respected.  

Key takeaway on Consumer Duty 

Putting the client's needs first is the cornerstone of Consumer Duty. Financial services firms must evidence their actions and ensure good consumer outcomes to gain regulatory approval. Investing in a robust CX strategy will put clients at the heart of the business, enabling you to improve the customer experience, build loyalty and drive profitability. 

If you need help or advice navigating the new Consumer Duty regulation, get in touch today to find your local customer experience specialist and to arrange a no-obligation chat.  

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