How to comply with the four outcomes and three cross-cutting rules of the Duty to achieve higher standards of consumer protection

The Consumer Duty is a major shift in expectations for the financial services industry. It places a huge responsibility on firms to understand customer needs, deliver good outcomes, and also support customers to meet their financial goals. This is not just a tickbox exercise. The new regulations represent a genuine shift from the reactive identification of customer issues to proactive support. Compliance is obviously important because it avoids fines and reputational damage. Yet firms that seize the opportunity will be able to build deeper connections with customers, which in turn will drive increased loyalty, higher retention and potentially even greater advocacy. 

We’re finding that different industries have slightly different challenges. For example, insurance companies are placing quite a lot of focus on their communications. Whereas a fintech might not necessarily have that challenge because their communications are less complex or were already more inclusive in their design. We also recognise this is not a one-off exercise. Compliance will have to be continually reviewed as businesses grow, scale, launch new products, and acquire new customers. 

Organisations are now racing to deliver compliance by the July deadline. We have seen three main challenges among Salesforce customers:

Reporting and analytics: Most firms have significant data resources, which are often stored in a number of systems. Collating that data centrally, filling in any reporting gaps, and then pulling insights to demonstrate continuous improvement can be difficult for some firms. Once the data is retrieved, it must be used to demonstrate compliance with the regulation, which involves reporting both upward and externally to the FCA. 

Identifying foreseeable harms: The Duty requires firms to avoid foreseeable harms throughout customer journeys. Part of addressing this issue involves building enhanced capabilities to identify harms. But before that, firms must define what is meant by foreseeable harm. The Duty sets out requirements for sophisticated analytics around vulnerable or dissatisfied customers, pushing firms to preempt when a customer is about to go into financial vulnerability, for example, or make a complaint so that they can step in and enact an early intervention to prevent them from going into further financial difficulties.

Building proactive processes and driving engagement: The Consumer Duty requires firms to be much more proactive. There are some real limitations in the segmentation of customer data that enables firms to do this because in order to provide tailored marketing journeys, or the right triggers and prompts at the correct point in a journey, firms really need to understand their customer. The data must all be in one place, which enables firms to understand customers’ behaviours and their transactions so that if there is a change in circumstances or another potential issue, they can step in and provide support. Part of the challenge is that firms don’t necessarily have that 360-degree view of customers to enable them to be more proactive. 

Complying With The Four Outcomes of the Consumer Duty 

The Duty sets out three “cross-cutting rules”. As well as avoiding foreseeable harm, it requires firms to act in good faith and help consumers to achieve their financial objectives. The FCA has also set out four consumer outcomes which must be achieved during the entire lifecycle of a relationship between a firm and its customers.

The first is consumer understanding, which means consumers have the ability to make suitable financial decisions based on information that is both understandable and available at the right time. Price and value is the second outcome. Products must be sold at a price which corresponds with their value and without excessive fees. The third outcome is products and services, which should match the needs of target consumers. Finally, the consumer support outcome rules that customer services must be helpful and respond to customers’ needs. 

The FCA wrote: “Our rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met.”  

Salesforce technology can support customers across all four outcomes as well as the three cross-cutting rules. There are four main ways firms can ensure compliance: 

Data-led insight and governance: To demonstrate compliance with the outcomes, firms will need to pull data from various sources, and for many, this will be time-consuming as data will be sitting on different systems. Unifying data into one place, and harmonising it to activate real-time insights and centralised views is critical. Many organisations will be relying on manual quality assurance data at the moment to determine whether they are delivering good outcomes for their customers. There is often a time lag and within that period a whole set of customers may have suffered poor outcomes. Embedded data and governance controls can identify potential problems and use automated controls to flag and remediate them. Data should also be segmented to provide actionable insights which can be accessed across the organisation. 

Delivering a seamless and omnichannel service: To comply with the Consumer Duty, firms need a 360-degree customer view. It’s not just about being able to view that data, but assessing how agents across channels connect and join the dots. Agents need access to a guided workflow which enables them to provide support and tools to provide that smooth, seamless journey, as well as all the data they need to make assessments of vulnerability. 

Proactive engagement: This is critical in providing proactive support and interventions at the point a customer needs it, helping to avoid financial harm and supporting customers to meet financial goals. It can be super useful for supporting vulnerability. So, for example, if someone has a joint policy with their partner, goes through a divorce and changes their name, a firm’s system should recognise that something’s not quite right and alert agents to review the customer’s policy. When an issue like this is identified, there should be some prompt or request which reminds the financial institution to contact their customer and ask if the policy should be reviewed. Automated analysis of customer transactions or voice and text analytics really enables firms to understand customer vulnerability or a change in circumstances.  

Mindset and culture: Firms must ensure that the Consumer Duty is embedded in their culture across all of the organisation so that all members of staff know their roles and responsibilities in delivering the regulations, and are provided with the right supporting and training tools.

Better Outcomes for Consumers and Firms

Both firms and consumers will benefit from The Consumer Duty, which will help to drive efficiencies and improve productivity, as well as saving time and cost. Compliance will enable a return on investment over time. However, this is not an easy task. Firms have to take everyone on the journey, from product teams to frontline teams and much more. At the heart of all of this is the positive idea of putting customers at the heart of your business. We hear the word “customer-centric” every day. Now customer-centricity is written directly into regulation, which should be welcomed by firms and their customers. 

‘To find out more, please read Salesforce’s perspective on the Consumer Duty Checklist. Salesforce has also created a demonstration on how its offerings can support financial services organisations.