How VOC can support Regulatory Compliance and Risk Management!

All financial services firms have numerous regulatory obligations to listen and act on customer feedback.??A voice of customer (VoC) program is essential to reduce a company's risk profile and can improve compliance for a number of regulations. I have highlighted some of these compliance obligations below, and given my take on how a VoC program can solve some of these challenges:?

• RG271—Closing the Inner & Outer Loop
• Design and Distribution Obligations—Focusing On Customer Needs, Transparency, and Ongoing Monitoring
• Best Interests—Gain Insights Into Member Preferences, Needs, and Expectations?
• Complaint Reduction—Reduce Business Costs While Reducing Complaints

RG271

Having a VoC program and associated closed-loop feedback activities help ensure you meet the obligation to have an “IDR system” in place under RG271.

Following the Royal Commission, on 5 October 2021 ASIC introduced Regulatory Guide 271 (RG 271) which specifies that financial firms (including AFSLs) must meet their obligation to have an internal dispute resolution (IDR) system that complies with the requirements made by ASIC.?

Under RG 271 financial services firms must:?

• Acknowledge and record all complaints,?
• Respond to complaints within prescribed time frames, and
• Include prescribed information in our responses.?

By capturing both unsolicited feedback (via customer complaints / social media reviews), identifying dissatisfaction, and then closing the loop with unhappy members and storing details of this feedback and actions, businesses can meet the obligation to have a fully functional IDR system in place.??

There is also a requirement to have a system in place that identifies the systemic themes that are driving complaints, and most VoC programs can manage this with text analytics—it’s the same as the “outer loop” concept which means you’re understanding the underlying issue(s) behind recurring customer feedback, and communicating those back to the customer.

Although survey responses themselves are excluded from RG 271, many compliance teams agree that providing another channel for member feedback supports compliance.

Design and Distribution Obligations?

A VoC program and associated closed-loop feedback activities help ensure we meet Design and Distribution Obligations (DDO).

DDO is intended to help consumers obtain appropriate financial products by requiring product issuers and advisers to have a consumer-centric approach to designing and distributing products.??

All firms have to ensure that financial products are designed and distributed in a way that meets the best interests of customers. The obligations require the following:

• All financial services organisations need to design financial products that are consistent with the likely objectives, financial situation and needs of the customers for whom they are intended.
• All financial services organisations need to monitor customer outcomes and review their financial products to ensure that customers are receiving financial products that are likely to be consistent with their likely objectives, financial situation, and needs.

A VoC program enhances the effectiveness of DDO implementation by focusing on customer needs, transparency, and ongoing monitoring.?

• Customer-Centric Product Design: CX insights can inform product design by identifying customer preferences, pain points, and needs. By involving CX professionals in the product design process, financial institutions can create products that align with customer expectations and improve overall satisfaction.
• Customer Feedback and Monitoring: Implementing a robust feedback mechanism allows customers to provide input on their experience with financial products. CX professionals can analyse this feedback to identify potential issues and make necessary improvements to product design and distribution.

A Voice of Customer program and associated closed-loop feedback activities help ensure we meet the obligation to act in the best interest of members and customers.

Best Interests

In each section of financial services, there is legislation that ensures advice provided and decisions made are in the best interests of the consumer.? For example, Section 52 of the Superannuation Industry Supervision Act 1993 (Cth) (the SIS Act) sets out a number of covenants that are taken to be included in the governing rules of superannuation funds in Australia. The best interests duty is set out in s52(2)(c), and provides that the trustee is 'to perform the trustee's duties and exercise the trustee's powers in the best interests of the beneficiaries'.

In order to deliver on this covenant, financial services firms must gain insights into member preferences, needs, and expectations. By leveraging these insights, financial services firms can make informed decisions, design personalised services, and enhance overall member experiences,?

By capturing both unsolicited feedback (via customer complaints / social media reviews) and solicited feedback from members and employer surveys at critical moments of truth in their journey, we can understand directly from members regarding their preferences, needs, and expectations.?

This information helps trustees tailor fund offerings, investment options, and services to align with what members value most, ensuring that the fund's decisions and actions are in line with beneficiary interests.

Complaints Reduction

Voice of Customer programs and associated closed loop feedback activities help ensure we reduce the number of industry complaints.?

Here are the ways in which a VoC program can help reduce complaints, ultimately reduce costs across the business:

• Proactive Issue Rectification: A VoC program will enable an organisation to proactively act on any negative feedback from a client early on. By identifying potential issues before they escalate, organisations can take preventive measures to recover customers before they complain.
• Root Cause Analysis: A VoC program will provide valuable insights into the underlying causes of complaints.? Financial services firms can analyse this data to understand common pain points, trends, and patterns, allowing them to address the root causes rather than just addressing symptoms.
• Customer-Centric Improvements: The insights from VoC will guide in making customer-centric improvements. By aligning products, services, and processes with customer needs and expectations, firms can prevent issues from arising in the first place, leading to a decrease in complaints.
• Employee Training and Engagement: The VoC program will help identify areas where employees may need additional training or support. Well-trained and engaged employees are better equipped to provide excellent customer service, reducing the likelihood of customer complaints due to misunderstandings or mishandled interactions.

In summary, VoC programs and the feedback collected from customers should be driving the decision making in technology in financial services funds. A well-constructed programs has the power to address regulatory obligations, enhance customer experiences, and minimise compliance risks in the financial services industry—not to mention reducing business costs and enhancing customer relationships in the meantime.

Please comment with your thoughts below….