The FCA (Financial Conduct Authority) in 2022 published their final rules for the Consumer Duty. This is a set of procedures that companies must have in place to meet the required standard of consumer protection and support. Many companies had to finish the Consumer Duty plan by October 2022. However, these new regulations apply mostly to retail financial markets. Here you can find the list of all providers who will be affected by this change.
According to FCA regulations, the Consumer Duty outlines four key outcomes that set out the FCA’s expectations of firms. This is in relation to: product and services, price and value, consumer understanding, and consumer support.
In this CXM guide, we will walk you though what each of these four outcomes mean and what’s needed for a successful Customer Duty plan.
Consumer perspective: why Consumer Duty?
With Consumer Duty regulation exposed on the retail sector in early 2022, customers will have to become the heart of every business decision. By increasing the service standards, customers will know what to expect, and what their rights and obligations are. All these will increase the industry standards and trust relationship with the consumers. That’s all wonderful, but have you wondered why now?
During the pandemic it became evident that there are many vulnerable customers. Their status only becomes more endangered with the cost-of-living crisis, isolation, and inflation. Therefore, with this new regulation, FCA hopes to increase fairness, and good outcomes for the users. This includes protection of their private data, and working towards an ethical agreement with each customer. This will consequentially force many companies to work on their corporate culture programmes, and invest in CX strategically and systematically.
There are the three rules each company will have to apply:
- Act in good faith towards customers
- Avoid causing foreseeable harm to customers
- Allow and support customers to ‘pursue their financial objectives’
These three rules will have to reflect in the above mentioned four outcomes of customer duty. Those being product and service, price and value, consumer understanding, and consumer support. Companies will have until August 2023 to start the implementation process.
Here are examples listed on the FCA’s website of what this will mean in practice:
- end rip-off charges and fees
- make it as easy to switch or cancel products as it was to take them out initially
- provide helpful and accessible customer support; not making people wait so long for an answer that they give up
- provide timely and clear information that people can understand about products and services. This is so consumers can make good financial decisions, rather than burying key information in lengthy terms and conditions that few have the time to read
- provide products and services that are right for their customers
- focus on the real and diverse needs of their customers. Including those in vulnerable circumstances, at every stage and in each interaction
What does this shift mean for CX?
Exposing rules and norms that will intentionally improve the level of service and consumer trust, can be only a great news for CX. Implementing Consumer Duty plans doesn’t mean just ticking the box, but initiating the whole culture and mindset shifts. Ultimately, this is all CX experts are hoping for. Even though Consumer Duty might appear as something new, it actually isn’t.
Customer experience professionals and practitioners have already been working on these improvements for years. The only difference is that now every company that belongs in the listed category will also have to dedicate time to building a strategy that will promise safety, fairness, and trustworthy relationship with their consumers.
If you, however, don’t have CX or Consumer Duty in place, start by mapping your consumers’ path. Mark their pain points and highlight all touchpoints you could improve.
Go back to some of the basic CX questions:
- Do we know what our values are?
- Do we live our values and deliver them to each consumer?
- Do our consumers know what to do in any given situation?
- How do I help them navigate through the journey?
- How do we measure consumer satisfaction?
- Does everyone in the company know what our CX strategy is?
- Do we have required skills to deliver good customer outcomes?
Embed your answers to these questions into adhering to the Consumer Duty guidelines. Tying back these CX-focused questions to a CX strategy will help you to stay on track. Not only that, but you will meet the required standard, while maintaining excellent customer experience and service.