Pressures on customers
There is a lot that customers need to consider, particularly in a period of tight purse strings, which means their choices need to be as simple and informed as possible. Prior to the current economic issues and fears of global recession, consumers had to make complex and numerous decisions that required important assets in a faster environment.
Unfortunately, not all businesses are willing to put in the effort to relieve the pressures on customers until they are forced to through legislation, regulation and strictly enforced standards. But businesses that embrace the guidance of the FCA and exceed expectations often find themselves in a stronger position and better regarded by their target consumers. By understanding the needs of customers and analysing their wants and situations, businesses can better respond to the ever-changing consumer atmosphere.
“The new consumer duty guidance is far reaching, and, in the current economic climate where customers feel increasingly vulnerable, it is vital that companies do not just see this as another box-ticking, compliance exercise,” said Tim Bowes, associate director, Dufrain. “The nature of it is focused on evidencing customer service and value, and financial services firms must be able to show that they have had the appropriate conversations with customers to enable them to deliver the best possible outcome: whether that is the right type of loan, the right bank account, the right mortgage product – the list goes on.”
Data is the answer
Businesses need to embrace an outcome-focused approach and ensure that they are equipped to handle the required flexibility and innovation needed to remain competitive. The regulations applied to outcome-based focuses can be applied more easily to technical change and organic market evolution, whereas detailed and prescriptive rules are often slow and tedious to implement. The protection of consumers from emerging harms – which is rapid in this current era – remains top priority and businesses need to change to accommodate these needs. By finding new ways to serve customers, businesses can improve their standards and reputation against competitors.
“To ensure this is the case, a considerable amount of additional data must be captured, and existing data must be better organised and prioritised,” said Bowes. “It is no good implementing multiple different solutions that operate in silo and do not allow the data to be translated across different parts of the business. Firms need one view of the customer and the right data protections in place – they must update their data practices so that they are based on modern and more agile data sourcing as well as visualisation practices that enable strategic delivery from the start.”
The new standards set out by consumer duty set high and clear requirements for firms to ensure products and services are fit for purpose, offer fair value and actively help customers to make informed decisions. With a focus on outcomes, the level of protection can handle the current transaction environment as well as flexibility for what the future may bring. Hopefully, this will enable businesses to develop a preventative and rapid attitude to issues regarding harm and non-compliance.
Ultimately, businesses need to thrive in a competitive environment, and they can only do this by appealing to the interests of consumers. With a fairer and more consumer-focused setting, firms should be able to invest in innovation more readily and enthusiastically than before, but a serious investment in data tools and culture is required to achieve this.
