With Consumer Duty’s next deadline looming, new research from engagement, data and customer journey platform Moneyhub reveals just how much work firms still have to do before they realise the business and consumer benefits of the Duty.
A year on from the introduction of the Financial Conduct Authority’s (FCA) Consumer Duty obligations, as many as two-fifths of customers have not noticed any changes to their treatment, says Moneyhub.
By 31 July 2024, FCA-regulated companies will have to review closed products and services against all aspects of the Duty. This in itself prompts a re-evaluation of products that current customers are on and whether they are still appropriate.
The research, which polled 2,000 UK consumers, found that only a fifth (22 per cent) have noticed improvements in how they are treated as customers since Consumer Duty regulations came into effect.
However, when asked about improvements to customer outcomes, 13 per cent said firms have failed to deliver good quality support and after-sales care, while 12 per cent said firms have failed to deliver communications that help them to make effective financial decisions. Another 10 per cent felt firms failed to offer suitable products and services that meet their needs.
Moneyhub also discovered generational differences in responses concerning changes in financial services firms’ behaviours. As many as 40 per cent of younger respondents thought they had noticed changes in how banks were interacting with them, compared to just five per cent of over 55s.
Looking to the future, many customers remain hopeful that Consumer Duty will have a significant impact on how firms interact with them. Forty-two per cent believe that the Duty will have a positive impact on the quality and range of products and services available – rising to 53 per cent among younger respondents.
Around 40 per cent think that Consumer Duty will have a big impact on customer servicing – rising to 48 per cent of younger respondents. Similarly, 36 per cent think that Consumer Duty will drive banks to become more customer-centric institutions – more similar to building societies.
Start ‘always with the data’
The FCA has repeatedly explained that firms must put data at the heart of their response to Consumer Duty. The regulator’s recent multi-firm review into insurance outcomes highlighted the importance of firms using new sources of data to design comprehensive measures that evaluate consumer outcomes as well as process outcomes, to proactively demonstrate that vulnerable customers receive outcomes that are the same as non-vulnerable customers, and that the monitoring of outcomes leads to proactive improvements.
Dan Scholey, COO of Moneyhub, explained the importance of data in ensuring compliance: “Consumer Duty really should be a win for both businesses who want to work more efficiently and effectively as well as consumers who need more tailored solutions at affordable prices. The early feedback from firms that have embraced it is overwhelmingly positive. However with significant fines now being imposed by the FCA we have both the stick and the carrot in place to see better outcomes delivered.
“Firms often don’t know where to start, but it is always with the data. The UK has made great strides through regulation to make the data available, and with it, firms can cost-effectively understand an individual’s needs and provide the right solutions at the right time. Embracing the use of third-party Open Data solutions is the best way for firms to meet Consumer Duty requirements while seeing a tangible impact on their customers’ day-to-day finances, and satisfaction levels.”
