The customer experience ‘consumer duty’ pledge

This article is featured on Finacial IT.

The Financial Conduct Authority (FCA) introduced a new Consumer Duty that will set higher standards for the protection of consumers across the retail financial market.

A 2021 study by the Financial Conduct Authority found that 50% of UK consumers show one or more characteristics of potential vulnerability based on their health, financial resilience, and capability, and on life events that could be having a detrimental impact on them.

The new Consumer Duty will force organisations to recognise and consider customer vulnerabilities in all consumer-related decisions so that everyone receives the same level of service and help to stop harm before it happens.

The new regulations will impact customer experience in the UK banking, financial services, and insurance industry by requiring firms to put their customers’ needs first, set higher and clearer standards of consumer protection across financial services, and proactively assess and evidence how they deliver good consumer outcomes.

In short, each customer touchpoint needs to be looked at through a vulnerable customer lens.

While the new rules (laid out in the FCA Policy Statement) don’t come into force for new and existing products open to sale or renewal until 31st July 2023 (July 2024 for closed products or services), businesses have already witnessed the potential repercussions should they fail to comply. The news of William Hill’s £ 19.2 million fine sent shock waves across the market as the reality of what awaits those who take the FCA’s words lightly hits with full force. So, with under just four months to go, businesses that are FCA-regulated must act fast.

The CX challenges for BFSI

Let’s take a closer look at some of the unique challenges that the banking, financial services, and insurance (BFSI) sectors face when it comes to providing a great customer experience.

BFSI customers expect instant access to their accounts and services which has led to the rapid development of self-service channels which offer customers convenience and speed. However, organisations must strike a balance between self-service options and genuine human touchpoints to create friction (a pause to slow down the process) during the right stage of the customer journey.

Data security and privacy are also critical considerations for BFSI businesses. Any data breaches or cyber-attacks can have a significant impact on customer trust and loyalty, leading to a loss of business and reputation damage. By implementing robust security measures and ensuring compliance with industry standards, BFSI businesses can provide their customers with a sense of security and confidence in their services, leading to greater customer satisfaction and loyalty.

With such rapid digital transformation taking place, it can be easy to jump at the chance of enhancing services with the latest technologies, but is that what customers want? What truly defines ‘convenience’ in the digital age for the modern consumer?

Convenience vs care

As BFSI businesses – banks in particular – evolve, the gap between their digital and physical presence in the consumer market grows. Many challenger banks have eliminated the physical presence, making exceptional digital customer experience a top priority. However, it’s important to strike a balance between convenience and care when designing a CX strategy, especially when it comes to vulnerable customers.

Incoming communications to BFSIs are sometimes emotive and complex, which can elevate stress levels for agents – particularly when working from home without the support of colleagues. This is where Consumer Duty will be crucial. Agents must be equipped with the tools to diffuse situations and transfer customers to the relevant sources of help as quickly as possible, providing the appropriate level of care and empathy.

Innovative technologies like artificial intelligence can play a critical role in automating processes and eliminating friction to streamline services. However, BFSIs must always present the option for the customer to speak to an agent, especially when dealing with vulnerable customers. This creates a sense of trust and care, making customers feel valued and listened to, rather than just another number in a queue.

Recognising all vulnerabilities

Exceptional customer experience is no longer just about convenience, but also about care, especially when it comes to serving vulnerable customers. The FCA’s Consumer Duty provides clear guidelines for organisations, but companies must take internal steps to ensure that agents are adequately supported in their roles.

One of the most effective strategies is to adopt an agent-first culture, where the needs of agents are taken into consideration just as much as those of the customers. When agents feel supported, they are better equipped to provide compassionate service to customers. By investing in specialised training, feedback systems, and innovative technologies, like AI, agents can identify and serve customers with empathy and care.

Organisations can implement an omnichannel solution. This does not only benefit the customer, who can choose the communication channel most convenient for them but also the agent, who can request to operate in the area that plays to their strengths. Automation will also remain a critical part of day-to-day operations as businesses continue to filter out any less urgent queries, diverting all critical issues straight to an agent.

In the end, FCA’s Consumer Duty is not just about complying with regulations, but also about demonstrating a commitment to providing exceptional care and support to all customers, including those who are most vulnerable. By prioritising the needs of both agents and customers, BFSI organisations can create a culture of empathy and understanding that will benefit everyone involved.

It’s therefore time to take the customer experience Consumer Duty pledge.