A CULTURE OF OPENNESS
MEETING THE CHALLENGE OF THE CONSUMER DUTY

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There is quite often an assumption, that as all businesses offering financial services are regulated by the same governing body (the FCA), they’re all delivering the same level of service … wrong! The need for the new Consumer Duty reflects that whilst there is a basic standard that is required of firms, the bar can, should and has to be raised.

The FCA want “firms to be incentivised to compete in the interests of consumers.” This is a competition we should all be fighting to win.

The proposed new rules mention ensuring “retail” customers are getting the right outcomes and that “retail” products are suitable, so it would be very easy to think it doesn’t apply to those of us in organisations that don’t offer typical financial products.

However, cast your minds back and the approach very much resembles the launch of Treating Customer Fairly (TCF) and how the six outcomes needed to be interpreted and adapted to financial institutions, across all industries who serve consumers.

So how, as organisations not offering typical products, can we make sure that we’re measuring our ability to deliver what is in the interests of consumers?

WHAT DOES RETAIL MEAN?
For me, we should simply ignore that word and focus on it being about customers, and the outcomes our “products”/services drive. In our industry (Debt Purchase) as an example, that could be about how we ensure customers understand that they’re not incurring any interest or charges on their account with us, so they need to prioritise their outstanding bills that are increasing on an ongoing basis.

That might feel counterintuitive, as surely we need to collect what we can, but if the customer is incurring more debt, is it really in their best interests to encourage them to use their disposable funds to repay cheaper outstanding debt? Conversely though, it might be in the customer’s best interest to clear outstanding defaults on their credit file, it’s a balance we must be able to evidence, to show that outcomes are in the overall best interests of the consumer.

It’s important to consider how a firm’s behaviours and culture may affect good customer outcomes. For example, are your colleagues confident in flagging and addressing issues and incidents when things don’t go to plan?

If not, those challenges may never be resolved, unintentionally giving the customer a poor outcome. It’s important to build a culture of openness to make sure you’re notified when things go wrong, so you can fix them and ensure issues are fully understood to allow changes to be made to drive improvements over the longer term.

The Consumer Duty is simply an evolution of Treating Customers Fairly, one which we should all embrace and be able to comfortably believe and evidence that we are acting in the best interests of consumers at all times.