Consumer Duty could be the gamechanger that we all need
Consumer Duty is likely to reach public awareness this year as the FCA steps up its communications campaign.
Whilst there’s a lot of work to be undertaken by the financial services industry, there are certainly clear benefits for customers. But I also think that, in terms of improving inclusion and growing trust, it could also be the gamechanger that the industry needs.
When the FCA announced its plans to introduce a new Consumer Duty it said the duty would, “… ensure a higher and more consistent standard of consumer protection for users of financial services and help to stop harm before it happens.” It stated that the new plans, which expanded on the existing rules and principles to treat customers fairly, would “…fundamentally shift the mindset of firms.”
It’s a move forward that I believe will lead to improved practices in the industry, which has to be a positive. Holding firms accountable is definitely a good thing for the consumer – who I think should be our biggest regulator.
Giving them knowledge allows them power and I’m sure this will help to drive the right behaviours by all firms. But it also gives a greater voice to those businesses who are already doing right by their customers, without having to be compelled to do so by legislation. In my view, they’re going to be in a good position.
For them, acting with integrity is already in the DNA of their business model which surely makes them more accessible and attractive to consumers.
I like the duty’s focus on outcomes, that firms will have to be clear on what consumers should expect from their products and services and make absolutely sure that they enable these outcomes by helping customers to make good choices.
I can see a close link here to financial inclusion, which is so important to me. It opens up the conversation to include those who need a bit of extra help and encouragement; people who aren’t fully conversant with the jargon of the financial services world.
Companies will now have a duty to support and empower these customers, and it’s good to know that all areas of retail financial services are going to be held to these same high standards.
"For us, Consumer Duty is not ever going to be just a tick-box exercise that needs to be completed."
At OneFamily we focus on serving the underserved – those who might need a friendly voice at the end of the phone to help them to make sound financial decisions. It’s something that we see this as an ongoing process.
We are constantly listening to and learning from our customers – as their requirements evolve so does the way that we serve them. I am anticipating that a greater awareness of Consumer Duty will change what’s expected of us by our customers – but that’s fine and we’re fully prepared to keep flexing to their needs.
Consumer Duty also brings the issue of trust into the spotlight. It does feel that, as an industry, we’ve moved away from trust – consumers are naturally suspicious when they don’t understand.
So, it’s understandable that financial services is a sector that the average person might fear because their lack of knowledge acts as a barrier. In my view, it’s crucial for customers to be able to trust their financial services company to explain things accurately and with transparency. It’s key to their financial wellbeing.
So, I think that the rebuilding of that trust, by the implementation of this initiative, is going to be a huge part in repairing the relationship between customers and organisations.
"I’m proud that, as a financial services mutual, our foundations are built firmly upon fairness."
The social conscience that historically led to mutuals being set up to support the impoverished in their times of need is still very much who we are and what we are about. And for where we are now, in 2023, doing the right thing and acting with integrity has never felt so relevant.
So, we’re already working in partnership with charities to elevate the provision of financial education - whether that’s by supporting a charity that enables schoolchildren to learn about finance or working with an advice-line for older people who are worried about their money.
We are taking active steps forward to reach the under-served by removing those barriers that I highlighted earlier. We want to increase their confidence and enable their participation in conversations about their finances.
We’re doing what we can to make a difference, but I would like to see an increase in consumer confidence - and therefore trust - in the financial services industry.
And I think this is where Consumer Duty will help everyone in our industry. It’s a great opportunity to change the narrative about who we are and what we stand for.
Perhaps it’s the gamechanger that we all need.
Teddy is a strong supporter of diversity, inclusion and equality. A passionate believer in social mobility and financial inclusion; he is using his position as CEO of OneFamily to help the young, the disadvantaged and the marginalised to reach beyond their expectations. His view is that everyone in society should have the same opportunities to access financial products – regardless of their wealth.
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