Consumer Duty is about to land. It’s going to signify changes for every organisation governed by financial regulations.
The changes are purposefully motivated and well-intended. If executed successfully, they will shift business thinking. This will create outcomes focused through the customer’s lens.
How you orchestrate your business to consumer relationship to better meet the needs of customers really matters. It’s having a timely shift up the agenda and pushing CX into the top priority spot.
Consumer Duty is how the FCA are pioneering change
The FCA have set up a three strand framework. This will help businesses align to the requirement and navigate what needs to be done.
Essentially, organisations must re-imagine their customer strategy and operational parameters around:
- A new consumer principle
- Cross-cutting rules
- Four conduct outcomes – price and value; products and services; communications; and customer service
Refreshing the role of businesses
These businesses must pause and reflect on the part they play in customers’ lives. The cost of living crisis is pushing more people across the boundary of comfortable circumstances to vulnerability. It’s vital that they act in good faith to ensure their actions are not directly or indirectly causing foreseeable harm.
The relevance of raising awareness of vulnerability (or the potential for it) is even more pertinent in the current economic climate. We should keep 3 things front of mind:
- it comes in a range of guises
- it’s largely personal, complex and understated
- it can affect any one of us – at any time, in any way
People in vulnerable circumstances are at greater risk of harm. This is what Consumer Duty aims to tackle.
Why is it happening? Well, at the core of the FCA’s intention is a new standard. This hinges on the principle that ‘a firm must act to deliver good outcomes for retail customers’. This reflects their view that, to date, businesses’ efforts around treating customers fairly and communicating with clarity haven’t gone far enough. It’s a shift that is going to provide a deal more protection for customers.
What does it mean?
Cost of living rises are having wide-reaching implications. Potential threats of debt or financial difficulty are causing more insidious social ramifications. As vulnerability is brought into sharper focus by the FCA, organisations need to consider their approach to a wider set of concerns.
The paradigm shift towards customer-centricity means acting in a way that reflects what is actually happening to customers in the real-world. For consumers, a minimum expectation is that businesses must deliver the right outcomes – good products and services at fair prices, high standards of customer care and clear communications.
This is an unmissable opportunity for every business to evolve their customer approach. The principles of the guidance are relevant beyond FCA-regulated organisations. As the inexorable shift towards more customer-focused operating models gains momentum, those who do nothing will get left behind. They will experience erosion in their bottom line, market share and customer loyalty.
These requirements include fulfilling many actions. From re-aligning processes to customer mapping, ensuring the ergonomic development of products and revising communication approaches, channels and narratives. What’s also important is that leaders must have clarity around the changes in culture and behaviour Consumer Duty is designed to bring about.
The human element is critical
This initiative is going to force businesses to see things from our point of view. The signal has turned green on the UK’s journey to customer-centricity. Any business that isn’t already transforming its operating model is in for a tricky time.
But it’s not just a compliance, risk or operational issue, it’s a human thing. If you evolve your CX approach holistically, you’ll simultaneously tackle the challenges of Consumer Duty, the implications of vulnerability, and improve business outcomes.
The possible solution
By broadening the scope and definition of our approach so we engage with every customer in a service-focused way, we’re displacing the need to characterise or label people at risk. Improving CX, especially in larger organisations, can feel like nailing jelly to the wall. It’s a jiggling nebulous concept where translating strategy or policy into values and actions that influence how people behave with customers, is hard to implement.
Consider this: 65% of CX is about how you make people feel, with operational process accounting for just 35% of the outcome.
How we make people feel, happens in the moment. It’s experienced in how we interact with our fellow humans; how much accountability we take for fulfilling our obligations; our ability to be professional in a compassionate, respectful and personalised way and so on.
If we want to consistently replicate our vision of CX at organisational level, we need to focus our efforts on the things that drive customer centricity:
- Creating the right team climate that enables good outcomes for all customers
- Setting the right mindset to approach customer interactions with intentions of providing responsive and accessible support
- Developing capability in the skills that guide our behaviour in-the-moment with customers
The inextricable link between a service-focused culture and customer outcomes is irrefutable. A central part of preparing for Consumer Duty is equipping people to deliver great CX. It’s more than going beyond a legal requirement – it’s about driving outcomes for everyone, irrespective of their personal circumstances.
Moving from intent to action
We typically find that the case for change is driven by one or more of 3 factors:
- Legal
- Moral
- Commercial
In the case of Consumer Duty, all three apply. Doing nothing is not an option.
As part of our work with the Collaboration Network, we’re providing exclusive access to one of our key diagnostic tools. This gives a read on where organisations are from a CX performance perspective. Just click on this link to download our eBook. You’ll find the diagnostic tool on page one. There’s no catch and no obligation – it’s absolutely free.
Here’s what’s involved:
- Answer the CX Performance Indicator questions (it’ll take you less than 10 minutes)
- Get a personalised summary with analysed results. This will help you understand where your organisation is on a scale of 1 to 4
- Receive a benchmarked report with anonymised cross-industry meta-data, analysis of findings and thought leadership to guide next steps
Enjoy the book. Understand more. Embrace the age of Consumer Duty. Put customers at the heart of how you do business.