The New Consumer Duty: The Time to Act is Now

Now that we have the final rules and guidance from the UK’s Financial Conduct Authority (FCA), there’s no excuse for not getting ready for when the new Consumer Duty comes into force on July 31, 2023.

With the focus very much on setting higher and clearer standards of consumer protection across the financial services sector, organizations need to act now to understand not only how the new Consumer Duty will impact operations, but what they need to change to ensure complaint compliance. For complaints teams in particular, you need to start assessing the customer complaint journey, examining its role in the wider customer journey and asking what else can be done in light of the new rules and guidance.

What Is the New Consumer Duty?

Before we do that, let’s start by taking a look at what the new Consumer Duty covers.

The Duty contains a new Consumer Principle, which reflects the overall standard of behavior the FCA wants from firms and which is defined further by the other elements of the Consumer Duty.

The Duty is also comprised of the following components:

The "cross-cutting rules" which:

1. Develop the FCA’s expectations for behavior through three overarching requirements that explain how firms should act to deliver good outcomes and apply across all areas of firm conduct

2. Inform and help firms interpret the four outcomes

The "four outcomes", which are a suite of rules and guidance setting more detailed expectations for firm conduct in four areas that represent key elements of the firm-consumer relationship:

1. The governance of products and services

2. Price and value

3. Consumer understanding

4. Consumer support

What Role Can Complaints Data Play in Ensuring Compliance with the New Consumer Duty?

Whilst the new Consumer Duty doesn’t only apply to complaints, it certainly has an impact on the complaints function. And, in turn, the complaints function can play a key role in ensuring business-wide Consumer Duty compliance.

When it comes to assessing the end-to-end customer journey, your complaints data can provide the insight needed to truly understand the customer journey. First-hand customer feedback, in combination with data into how and why customers complain and how satisfied they are with the outcomes of their complaints, is a key factor in assessing how financial services businesses are meeting their Consumer Duty obligations. This information can be used to highlight any issues, as well as informing the changes needed to ensure Consumer Duty compliance.

Making sure you collect comprehensive data is of utmost importance, with a robust complaint management system helping you to achieve this goal. Not only that, but the FCA mandates that organizations need to keep diligent records to evidence that they’re meeting their Consumer Duty obligations. Again, another core process that a good complaint management solution can help.

Consumer Duty Compliance Right Across Your Business

Another core facet of the new Consumer Duty is the fact that it must sit at the heart of your organization’s culture, touching on every area of the business with everyone focused on delivering good customer outcomes. As such, you need to have policies and controls everywhere to ensure your organization is meeting obligations at all levels.

When it comes to complaints, this could take the shape of intelligent workflows within complaint management systems, signposting complaint handlers to the best course of action to take to ensure those good customer outcomes relevant to that particular customer. Quality assurance checks and balances are also a useful feature of the right complaint management system too, helping to identify any gaps in knowledge and training issues, as well as examples of best practice related to Consumer Duty that can be replicated elsewhere in your organization.

Comprehensive Reporting Underpins Robust Compliance

The new Consumer Duty requires businesses to continuously monitor and review their delivery of good consumer outcomes. As such, accurate record-keeping is a must, with your organization responsible for providing evidence (at a sufficiently granular level) that you’re meeting your Consumer Duty obligations, delivering the behaviors, standards and outcomes expected. Again, the right complaint management system like Aptean Respond can help with this, with advanced reporting functionality built-in, delivering timely, in-context information via accessible, easy-to-understand reports that can then be used to evidence Consumer Duty compliance.

Ultimately, the new Consumer Duty wants to see that your organization is delivering the behaviors, standards and outcomes it’s looking for, to ensure that you’re providing good and fair outcomes for customers at every step of the customer journey. Complaints is a core component of this, not only enabling your business to showcase just how far it goes to ensure these good and fair outcomes, but providing in-depth insight into the customer journey that can inform best practice right across your organization. We encourage you to embrace the implementation period, putting the processes and procedures in place now so you can hit the ground running next July.

The right complaint management solution can be a real catalyst for Consumer Duty-related change, helping you to not only uncover the insight needed to inform organizational change but allowing you to demonstrate how you are putting customers at the very heart of your business, focusing on delivering fair outcomes for every customer, every time.

For more information on how our complaints management software, Aptean Respond, can help you prepare for the new Consumer Duty, contact us today.