Consumer Duty and Improving Customer Outcomes step-by-step

Having managed Consumer Duty programs in the wealth, asset management and retail insurance spaces over the last few years, it’s been fascinating to see first hand how different sectors face very similar challenges in complying with the regulations and shifting the firm's focus onto delivering good customer outcomes and avoiding foreseeable harms. A year into the regime for most of us within financial services, it’s now not all about the headline grabbing changes, it's BAU and often it’s the basics that just need a refresh.

"But we’re already 100% compliant! Done, dusted, delivered by the July 31st 2023 and handed over to BAU". To this I say well done you, however Consumer Duty and delivering Good Customer Outcomes is a continuum. Your firm and your customers will benefit from members of your team regularly taking deep dives into BAU and improving the processes and customer journeys step by step. Just as we've always done.

For example, let’s look at Root Cause Analysis of complaints and issues impacting your customers. ?Getting to the bottom of why customers did not achieve good outcomes and felt compelled to complain, is critical to improving the service you provide and ultimately delivering improved customer outcomes. It's continuous improvement.

Often I’ve seen the focus here on the symptoms and a superficial analysis of what went wrong, rather than delving deeper and getting to the fundamental causes, e.g. “The issue was caused by a customer associate who forgot to tick a critical checkbox during the process…training recommended…”. A real example! I explained that this outcome completely misses the point. What really caused the associate's oversight? And more importantly why is a critical process reliant on a checkbox being ticked by an employee?! Especially one who is more than likely having to rush between calls to meet their targets.?

One of my clients recognized that that their analysis on what went wrong was just not helping to turn the dial and took this so seriously that together we wrote a detailed procedure on how to undertake root cause analysis and rolled out interactive training to the teams. Much of which involves the associate asking “but why” repeatedly, like some petulant child, until they have arrived at the fundamental root causes. It’s a bit of a mindset shift, but once you’re there, you can really try and do something about the causes rather than reapplying sticky tape and reverting back to "more training" as the cure all.

Reviewing customer journeys to identify foreseeable harms is another area requiring focus. Especially where there are wide distribution networks or intermediaries involved that all do things a little differently. Are they really serving up the critical information to support decision making at the right time? ?Is there enough information in the FAQs to support customers, and in the insurance sector: is the policy auto-renewal transparent allowing opt-out during the quote journey? Or is this hidden in the Policy Wording, forcing you to remember to reach out or react when the reminder comes in... always at the most inconvenient time!

And finally for this article, talking a fresh look at your customer communications with a Consumer Duty lens. Even the most mundane letter, email or automated text will assuredly benefit from a revisit. For example, one of my clients proudly offered a range of different communication formats such as large print, braille and audio which was great and this service was helpfully noted on their website, however the take-up was always low. The review identified an opportunity to update the standard communications to include a note that these services were available. Lo and behold..! Adding this simple wording, especially to the more complex letters, really helped to tick-up the use of these service adaptations for customers with impaired vision. Successful outcome testing 101!

My best wishes to those wrestling with their closed book and run-off products ahead of the 31st July 2024 and ongoing thereafter. Closing the products to new customers, perhaps because they weren't delivering fair value or good outcomes, solves one issue, but leaves the very big challenge on how to manage the existing customer base. Cancelling these products completely may well cause more foreseeable harms to these customers than the lack of fair-value, particularly to ageing customers who might not be able to find comparable products. This is going to be a biggy in some sectors!

Many thanks for reading and I hope you found this useful. If you are wrestling with similar issues, please do reach out. I'm always happy to give you some impartial advice based on my experience.

Regards

Marc Kavanagh

?#ConsumerDuty #GoodCustomerOutcomes