Jessica joined RWA in 2018, having graduated with a First Class Honours degree in Film Studies. Her role as a content designer involves developing new and engaging e-learning modules as well as assisting in the creation of articles for Insight.
The deadline for the FCA’s new Consumer Duty regulation is less than two weeks away. As we count down to the implementation date on 31 July, let’s take a look at what firms should be doing to ensure they are ready to meet the requirements laid out in the FCA’s guidelines.
Protecting vulnerable customers has long been a focus for the FCA. Customers with protected characteristics or characteristics of vulnerability are more likely to have additional or different needs. If these needs are not met by firms, the customer could be at risk of harm if, for example, they have difficulties in making decisions or representing their interests when pursuing their financial objectives. Under the guidance outlined in the new Consumer Duty, the FCA expects customers with vulnerable characteristics to experience outcomes as good as those for other consumers.
Last month, the FCA published 10 questions for firms to consider in preparation for the new Duty. Three of the questions relate to supporting customers with characteristics of vulnerability:
Firms need to consider the potential positive and negative impacts of current products or services, ensuring that they meet the needs, characteristics, and objectives of customers in their target market, and that includes those with protected characteristics or characteristics of vulnerability.
Design and functionality of products and services should be created with inclusivity in mind at all stages of the product and service design process. The same product or service design will not meet the needs of all customers, so adaptations and alternative options should be available.
Key considerations include:
Any information provided about a product or service should be clear and concise, alongside additional support and resources for customers who are less familiar with insurance or managing their finances.
Firms should be considering how they currently communicate with customers and whether the existing channels meets their customers’ needs. Customers should be able to receive and understand the information communicated so that they are equipped to make decisions that are effective, timely, and properly informed.
Every customer will have different preferences on how they wish to communicate, whether it be by phone, email, or video call. Some communication methods may be easy to use for some, but difficult for others, which makes it important to offer multiple channels of communication, where reasonably possible.
One of the key parts of the Duty requires firms to assess, test, understand and evidence customer outcomes. Without regular monitoring practices, firms may find it impossible to recognise whether they are delivering good outcomes in line with the requirements.
Complaints data may be the first area firms will look to when monitoring outcomes, and whilst that can be a valuable source of information, firms will need to go beyond complaints data to gain better insight and assurance on customer outcomes, looking into other areas such as:
Whilst monitoring of outcomes is only required after the deadline, it is recommended that firms should already be getting into the habit of monitoring early so that they establish good practices before the end of July. Firms will also be required to maintain up to date records so that they can be provided to the FCA in request.
We have covered the Consumer Duty extensively in previous articles over the past year. To go back and view these topics in more depth, click here.
Users of the Development Zone can also find a range of Consumer Duty courses in their course catalogue, including:
For those not currently using the system, you can find out more and request a free 14-day trial here: https://mydevelopment.zone/#getStarted
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