Fintech
Moneyhub reveals consumer duty remains a work in progress
A year after the introduction of the FCA’s Consumer Duty (CD) obligations for financial services firms, a whopping two-fifths of customers have noticed no change in their treatment, according to research from customer journey, data and engagement platform Moneyhub. As the deadline for financial services firms to implement the CST on closed-end products rapidly approaches, research suggests that firms still have much work to do to realize the business and consumer benefits of the CST.
The research, which surveyed 2,000 UK consumers, found that just a fifth (22%) said they had already noticed improvements in the way they were treated as customers since the Consumer Duty regulations came into force. However, when asked about improvements in customer outcomes, 13% said companies had failed to provide good quality support and after-sales care, while 12% said companies had failed to provide communications that helped them make effective financial decisions. 10% felt companies had failed to offer suitable products and services that met their needs.
The research also revealed stark generational differences when it comes to noticing changes in the behavior of financial services firms. A full 40% of younger respondents thought they had noticed changes in the way banks interacted with them, compared to just 5% of those aged 55 and over.
Looking ahead, many customers remain confident that Consumer Duty will have a significant impact on the way businesses interact with them. Over two-fifths (42%) believe Consumer Duty will have a positive impact on the quality and range of products and services available, rising to 53% among younger respondents. 40% think Consumer Duty will have a big impact on customer service, rising to 48% among younger respondents. Similarly, 36% think Consumer Duty will push banks to become more customer-centric institutions, more like building societies.
By 31 July 2024, FCA-regulated firms will have to review closed products and services against all aspects of Duty. This in itself requires a reassessment of the products that current customers are on and whether they are still appropriate.
The FCA has repeatedly stated that firms must put data at the heart of their response to Consumer Duty. Indeed, the FCA’s recent multi-firm review of insurance outcomes has further highlighted the importance of firms using new data sources to design comprehensive measures that assess consumer outcomes and process outcomes, to proactively demonstrate that vulnerable customers are receiving the same outcomes as non-vulnerable customers, and that monitoring outcomes leads to proactive improvements. It is vital that firms detail their data gaps and develop plans to improve their data or approach to monitoring.
Dan Scholey, COO of Moneyhub comments: “Consumer Duty really should be a win for both businesses who want to work more efficiently and effectively, and consumers who need more personalised, affordable solutions. Initial feedback from businesses who have adopted it has been overwhelmingly positive. However, with the significant fines imposed by the FCA*, we have both the carrot and stick in place to see better results.
“Companies often don’t know where to start, but it’s always with data. The UK has made great strides through regulation to make data available, and with that, businesses 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 businesses to meet Consumer Duty requirements, while seeing a tangible impact on their customers’ day-to-day finances and satisfaction levels.”