When the FCA launched Consumer Duty on 31st July 2023, their goals were to see reduced consumer harm and better outcomes for consumers, outcomes such as:
- Justified and consistent fees based on the products provided.
- Better treatment for vulnerable customers
- Reduced complaints relating to mis-selling
However, research conducted suggest that Some 84% of consumers say there has been no difference in the service they receive from financial providers since Consumer Duty launched.
A desire for human interaction
Consumers said they were most frustrated by the lack of access to human support, this was the view of 48% of people who took the poll.
The poll also identified that 24% complained about financial service providers over-reliance on chatbots.
This is why at Connect we have always emphasised that AI and chatbots are a great way to give customers and staff quicker access to information, but that ‘the human in the loop’ was essential to not become over reliant on this technology and to still give people that human interaction that is so very important.
An email is quick and easy, but it can’t replace a phone call for relaying information and keeping people feeling informed.
So how has Consumer Duty impacted Vulnerable Customers?
A number of people who took this survey said they would define themselves as Vulnerable, according to the FCA’s definition. However, 81% said they had seen no positive improvement in the way they had been treated by financial services companies in the last year.
Research from the FCA says that 47% (or 24.9m) of UK adults display one or more characteristics of vulnerability.
However, reports from our own systems show that only 1% of customers are being registered as Vulnerable, meaning that either advisers are not identifying potentially vulnerable customers or that customers are not confident in disclosing this information, this could be for fear of how we, or lenders, will use this information.
This is why it is so important to have good conversations with customers and use the fact find to help understand their circumstances and make them feel comfortable and confident in disclosing this information.
Lenders are now wanting to ensure that the transition from adviser to lender is as smooth as possible for vulnerable customers and will often ask for this information during the sales process. This way, the customer does not need to repeat this information, and the lender will be able to make the appropriate changes to the way they deal with that person.
Whilst Consumer Duty is an ongoing process, the changes Connect have already made appear to be working. Our complaints records show a consistently low number of complaints and very few complaints raised have been about mis-selling or fees charged.
Our fees policy, which covers all products that we offer and not just those that are regulated, means that all customers will receive a fair and consistent fee for the service provided. The fact that a customer was willing to pay a fee, isn’t evidence that the fee was fair and appropriate, which is why it is important to regularly review your fees and ensure they are inline with the networks standards.
One area we can improve on is having conversations around protection. Since Connect launched the VouchedFor customer surveys, we have seen that there are many instances of customers who wanted to have a conversation about protection, but never did. Not only is this a missed opportunity from a sales point of view, but it also goes against the FCAs desire to reduce foreseeable harm.
Having a conversation with a customer about their need for protection is important in addressing potential future harm, as no one knows what will happen in the future, and having protection in place is a great way to ensure people do not lose their homes should certain unfortunate events happen.
if you need any further information, please contact the Compliance Department who will be happy to help.
Regards
Alan Baldwin
Director of Compliance
For any questions or queries, contact the Compliance Team
Call : 01708 676110