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Consumer Duty

Consumer Duty

Putting customers first and foremost.

Having successfully implemented Irwell’s approach to the Consumer Duty, Chris Breakwell, our Chief Risk Officer has just returned from the Informa Consumer Duty 2024 Conference. Chris took part in a panel discussion with an audience of financial services delegates to discuss how communications can be best adapted to meet the needs of customers with vulnerable characteristics.

The Consumer Duty introduced a new Consumer Principle – to deliver ‘good outcomes’ for retail customers. This is built upon the cross-cutting rules that require firms to:

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

Sounds sensible. Seems reasonable. But what does this mean in practice?

In short and sweet terms, Consumer Duty is all about putting the customer at the centre of what your business does.

Your customer may not always be right – but making sure you understand and listen to your customers’ concerns will help you to achieve good outcomes for those customers. Clients need to know they matter. Don’t take them for granted. Never be complacent. This may sound like wise words from a marriage guidance handbook, but building long-term, trusting relationships is just as important in business.

So, first and foremost, cast aside your preconception that your business is one of the ‘good guys. Even good guys can always do better. Best practice is a movable feast, not a final destination.

Customer Duty compliance

Some products and services don’t provide the same good outcomes to customers forever.

What started out as the perfect product or smart service for a first-time property investor, a new business start-up or growing hospitality or hotel chain may not necessarily satisfy their evolving needs throughout their lifetime journey. It’s your job to ride alongside and ensure your products continue to deliver what customers need in the face of their evolving circumstances.

This goes over and above simply treating them fairly or charging a fair price. It’s about recognising that customers are unique, and their circumstances change over time – and so must the way you service their needs, the products you develop and the way you communicate with them.

Sheldon Mills, from the FCA, explains that the duty is needed because all too often consumers are “not given the information they need to make good decisions and are sold products or services that do not offer the benefits they might expect.”

Undoubtedly Consumer Duty should – and will drive change in company culture. Successful financial services firms will put customers at the heart of what they do. Successful businesses will innovate and develop products and services that meet consumer’s expectations and deliver good outcomes.

Those that don’t, face being held accountable by the FCA.

Raising standards in customer products and protection

Consumer Duty is all about achieving ‘good outcomes’ for customers.

But what will these ‘good outcomes’ look like?Good outcomes relate to products and services, price and value, consumer understanding and consumer support. In summary, Consumer Duty demands that businesses must:

  • Provide products and services that are specifically designed to meet the needs of customers and sold only to those whose needs they meet. 
  • Make it as easy to switch or cancel products, as it was to take them out. 
  • Give helpful and accessible customer support. 
  • Supply timely, clear, and understandable information about products and services, so that people can make good financial decisions. 
  • Provide products and services that are right for their customers and that provide fair value
  • Focus on the real and diverse needs of customers, including those in vulnerable circumstances.

From the way companies support victims of financial fraud to ethically and professionally handling pension transfers, investments, or insurance claims, the FCA is watching. Communications with vulnerable customers, and those who are, or could be, in situations that could lead to vulnerability, will all be under the scrutiny of the FCA spotlight.

Be prepared. The devil is in the detail.

Is your brand font legible? Do you supply accessible communication formats such as audio, braille, or Moon? Does your employee training and mentoring enrich a customer-centric culture and ensure employees have the skills to give your customers a safe environment where they can comfortably and confidently discuss their vulnerabilities? Do you have a customer engagement process that tests your customers’ understanding of your products and services? Do you welcome – and act on feedback?

Businesses need to look at their entire customer journey and make sure it starts – and ends with the customer.

Consumer Duty applies to existing products and services that consumers bought or renewed from 31 July 2023 and products and services in ‘closed books’ from 31 July 2024.

For further information visit: Consumer Duty | FCA

February 2024