I think it’s safe to say the landscape of financial regulation and service delivery is undergoing a seismic shift right now.
With the implementation of the FCA Consumer Duty rules and the introduction of ISO 22458 ‘Requirements and guidelines for the design and delivery of inclusive service’, firms are facing a new era that places the consumer at the heart of their operations - and rightly so!
This transformation isn’t just about compliance; it's about fostering a culture that truly understands and responds to the needs of customers, particularly those in vulnerable positions. Embracing ISO 22458 for example, nurtures a culture of social and ethical responsibility within firms. By adopting this standard, firms are not merely complying with regulations; they are committing to a higher level of social consciousness, ensuring that their practices are aligned with broader societal values.
So let’s explore seven key considerations that firms must embrace in a post-Consumer Duty world.
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Understanding consumer vulnerability
In the wake of the pandemic, over 9m people in the UK find themselves over-indebted and struggling to keep up with household bills. Understanding and addressing consumer vulnerability has never been more crucial. ISO 22458 sets the benchmark for identifying and responding to customers in vulnerable positions. This internationally recognised standard provides a structured blueprint for a vulnerability-centred approach to service design and delivery, recognising that anyone can find themselves in such situations.
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Adopting a principles-based approach
The Consumer Duty rules encourage firms to act in ways that promote beneficial outcomes for retail customers. This principles-based approach is a game changer in financial controls and regulation, obliging firms to act consistently in the best interests of their clients. It's a cornerstone of the sweeping regulatory transformation that's taking place.
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Emphasising product and service delivery
Firms must now focus on various aspects of product and service delivery, ensuring that they align with customer needs, characteristics and goals. This wide-ranging setup reinforces firms' obligation to consider an array of factors at each stage of the customer journey and experience. The emphasis on delivering quality products and services that meet the unique needs of each customer is paramount.
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Ensuring fair price and value
The new regulations emphasise the importance of offering fair price and value. Firms are expected to consider the needs of all customers, especially those showing signs of vulnerability. This approach ensures that pricing strategies are transparent, fair, and aligned with the value provided, fostering trust and loyalty among customers.
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Enhancing consumer understanding
Firms are now expected to foster consumer understanding through transparent communication and education. This involves helping customers make informed decisions by providing clear information and guidance. The goal is to empower consumers, enabling them to navigate the complex financial landscape with confidence and clarity.
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Improving customer care and support
The focus on customer care and support is paramount in a post-Consumer Duty world. Firms must adapt their strategies to provide necessary support at every step of the customer journey. This includes understanding individual needs and providing tailored support, ensuring that no one falls through the cracks.
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Fusing Consumer Duty with ISO 22458
Integrating the principles of the FCA's Consumer Duty with the guidelines of ISO 22458 creates a potent synergy. This convergence broadens the horizon, urging businesses to develop a deeper understanding of customers. It highlights the importance of a more inclusive, vulnerability-sensitive approach, where firms not only recognise the vulnerability of their customers but also endeavour to make their experiences as beneficial as possible.
With a forever-changing landscape, the spotlight is shifting towards a more inclusive, vulnerability-sensitive approach. As we move towards this new dawn, firms must choose to shape their future in alignment with these revolutionary principles – and it can’t be done on the FCA rules alone.
