Consumer Duty can ‘redefine our industry’
9th January 2024Tweet
Consumer Duty compliance requires a multi-faceted approach and continuous focus, according to Suneeta Padda, Managing Director, Padda Consulting.
Talking at ILC’s inaugural Risk and Compliance event in Manchester recently, she said that companies who fail to scrutinise every area of their business or approach compliance as a ‘once and done’ task will fail to deliver fair outcomes consistently and could face penalties from the Financial Conduct Authority.
She said, “The FCA says Consumer Duty is a paradigm shift in regulation, and it is because there are a lot of different facets to it. But ultimately it comes down to a customer-centric approach and adapting our processes to suit their needs. We know there are long-term benefits of making sure the customer is at the heart of everything we do.”
She said that while many different areas need to come together to ensure a company is meeting its obligations to customers, there are five key considerations that are relevant to all organisations:
Continuous improvement – following the pandemic and now the cost-of-living crisis, the industry has a duty of care to customers, many of whom will be vulnerable. Vulnerability, Suneeta said, can take many forms. “A vulnerable customer isn’t just someone with a disability. A person could be going through a difficult time in their private life. Vulnerabilities go on and on and supporting them fairly requires continuous assessment and improvement.”
Feedback – businesses need to have channels where customers can easily provide feedback and they need to be open to that feedback in order to make real-time improvements.
Training – not all training should focus on tech and process. Call handlers need to be empathetic and patient and some companies have brought experts in to give colleagues the tools to handle difficult situations. Suneeta said, “A call handler solely focused on targets won’t meet Consumer Duty standards because someone, somewhere will need a bit more attention. So maybe training needs to evolve.”
Data analytics – by interpreting the data astutely, insurers can gain deeper insights into their business and identify any areas where improvements are necessary. Meanwhile, predictive analytics can help understand where customers is going and prevent issues in the future.
Communication – needs to be transparent and clear both with the customer and internally. Suneeta said, “You don’t want to create a culture where people are afraid to admit they made a mistake or that there is an issue. Do you want to spot the problems in your business yourself or do you want someone else to point it out to the FCA?”
Following the pandemic and now the cost-of-living-crisis, Consumer Duty poses a real challenge. It requires a fluidity of resource to meet both volume and individual demands, and a flexibility of service to suit older customers and the next generation.
However, if done well it is also brings great opportunity.
Suneeta concluded, “We shouldn’t just look at Consumer Duty as a rule we follow. It should be a way of life; it’s a chance to redefine our industry with trust, creativity, and the customer at its heart.”
The Risk and Compliance event was sponsored by Albany Group, First Central, Gallagher Bassett and Padda Consulting.Tweet