The financial landscape is evolving, and with it, the expectations on financial services to deliver not just products, but value, understanding, and care to their clients. At the heart of this transformation is the Financial Conduct Authority's (FCA) introduction of the Consumer Duty, an initiative designed to ensure that firms put consumers' needs and outcomes at the forefront of their business practices. The Consumer Duty rules have applied to open products and services since 31st July 2023, and these are due to be applied to closed products and services from 31st July 2024.
For contact centres operating within the financial services sector, this has marked a significant shift towards more consumer-centric operations.
But what exactly does this mean, and more importantly, how can contact centres adapt to not just comply, but thrive under these new regulations?
Understanding the Consumer Duty
At its core, the Consumer Duty establishes a higher level of expectation for the financial services industry. According to the FCA, the Duty is centred around ensuring four key consumer outcomes:
- They receive communications they can understand
- They are provided with products and services that meet their needs
- They receive customer service that supports them in their financial objectives
- They are offered fair value in the products and services they purchase
This holistic approach is not just about compliance; it's about reshaping the industry's culture to be genuinely customer centric.
While the Consumer Duty rules have applied to open products and services since 31st July 2023, these are due be applied to closed products and services from 31st July 2024.
The implications for contact centres
For contact centres, this regulatory change requires a comprehensive reassessment of how they interact with consumers. It means moving beyond the transactional nature of customer service to build real consumer trust and satisfaction. It also means implementing training programs that emphasise not just the technicalities of products and services but also the importance of empathy, clarity, and the ability to gauge and meet consumer needs effectively. This matters, in fact, as 86% of consumers say receiving empathy is important for building stronger brand relationships. Furthermore, contact centres will need to adopt strategies that ensure every customer interaction is measured against the Duty's standards, ensuring that fairness, understanding, and value are not just promised but delivered.
To understand the consequences of non-compliance, we can look to recent regulatory changes for lessons in how the FCA will deal with breaches of the Consumer Duty. They have confirmed they will prioritise the most serious cases, acting quickly and decisively to take actions such as “interventions or disciplinary sanctions” where needed. In addition to the possibility of significant financial penalties, companies should consider the reputational risks, as public disclosure of non-compliance can erode consumer trust and deter potential customers.
Next steps for compliance and excellence
Achieving compliance with the Consumer Duty requires a proactive approach. Contact centres need to identify and address any gaps in their current practises that may not meet the new standards. This could involve reviewing call scripts, customer feedback mechanisms, and staff training programs. Additionally, implementing robust training focused on the principles of the Consumer Duty is crucial, as is adopting technology solutions that can aid in monitoring compliance and enhancing customer interactions.
Meeting the Consumer Duty is not a one-time goal: Contact centres need to aim for continuous improvement, using regular reviews of practices, outcomes, and consumer feedback to guide their strategy.
The FCA recently published its observations on good practice and areas for improvement which should act as guidance for organisations. For contact centre leaders, the observations around vulnerable customers, consumer understanding, and consumer support are particularly relevant.
The role of technology in navigating the Consumer Duty
To deliver great customer experience, organisations first need to ensure their systems are optimised to meet consumer needs and enable seamless operations. This is crucial, as Puzzel’s recent study shows that one third of contact centres expect outdated systems to slow them down in the year ahead. In this new regulatory environment, a CCaaS solution can help financial services contact centres adapt to and excel under the Consumer Duty.
Tools like advanced analytics that monitor customer interactions and uncover areas for improvement, to intelligent automation that identifies and prioritises support for vulnerable customers, can transform the way financial institutions engage with their clients. Picking a trusted CCaaS partner that offers comprehensive training for agents to deliver empathetic customer service will help ensure every interaction is both compliant and conducive to positive outcomes.
The Consumer Duty represents a significant shift towards a more ethical, consumer-focused financial services industry. For contact centres, it presents both a challenge and an opportunity to redefine their role in consumer finance. By embracing the principles of the Duty and implementing the necessary changes, contact centres can not only comply with the new regulations but also elevate the quality of their customer interactions.
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Authors:
Jacob Gardiner, Senior AE | CX & AX Specialist | FS&I Sector
Scott Walker, Senior AE | CX & AX Specialist | FS&I Sector
