What’s next? More of the same, that’s what! As we all know, that’s the nature of the regime; it’s here for keeps.
We know from the FCA’s reviews of firms’ mandatory Consumer Duty Board Reports that their initial assessment of the industry’s response to the requirements of Consumer Duty has been broadly “ok for starters, but you can try harder”!
The FCA’s update on its review of the Consumer Duty rules promised some simplification and removal of some arguably unnecessary, prescriptive requirements (in line with the Treasury’s ‘cut red tape’ agenda), but the range and depth of the permanent change in the treatment of customers that the FCA wants to see will remain.
This is to be expected and no doubt most firms are focused on the FCA’s specific callouts for Board Report improvements such as:
- Improving the quality of data – and the insights derived from it
- More fully reflecting the needs of different consumer cohorts, especially those with vulnerabilities
- Ensuring that boards are challenging – and seen to be challenging – the business to meet the Consumer Duty’s requirements
- Clarity on the timescale, action owners and data to drive planned improvements
But one further area for improvement will be particularly relevant to colleagues in the customer experience and/or contact centre space – “Comprehensive view across distribution chains”.
Yanking the chains
The FCA has long recognised the importance – and potential for the risk of service and experience failure – in distribution and supply chains. Many financial services organisations will have already had to review their supply chains to meet the FCA’s expectations around Operational Resilience.
Meeting the outsourced, sub-contracted and third-party challenge
In the context of Consumer Duty, though, the focus needs to be less on the dangers of total failure than the more subtle risks of poor visibility and exchange of information, and inconsistent consumer treatment and experience.
The way in which financial products and services are sold, delivered and supported can often involve multiple partners in the supply chain – covering sales, payments, customer service, claims, redemptions and other functions.
At nearly every point of the customer journey the way in which consumers are supported and interacted with, both through human-to-human dialogue and automated channels, creates a Consumer Duty risk.
Outsourced and sub-contracted relationships need to be managed to ensure that the standards of consumer data and insight; advisor training and empowerment; online and automated information and decision making; consumer recognition; fairness; and effective compliant recognition and resolution; are all delivered as well as they are in-house. To do so will require a blend of initiatives and efforts, including:
- Contracts and service–schedules; contractual management Information and KPIs
- Data and information security assurance, including payments (and the news that Marks & Spencer’s recent £300m cyber-attack is being blamed on a 3rd party supplier’s error highlights the criticality of this area)
- The quality assurance and provision of guidance and information to both customers and advisors
- The ability to share and identify customer profiles and features (especially vulnerability factors)
- Advisor training and coaching
- The provision of self-serve and assisted support tools and concessionary measures
(and all of these are an ongoing commitment, not just a ‘one time fix’)
In Summary
Managing complex customer supply chains can be tricky at the best of times, but adding in a raft of demanding regulatory expectations and requirements makes it more difficult still.
Have you already met this challenge or are you still assessing how to better go about it? Let us know. Get in touch, we’d love to chat.
