One of the most striking elements of the Consumer Duty is that for the first time firms have been mandated in effect to deliver good customer service via the Consumer Support Outcome, says Dom House, Lead Consultant at Simplify Consulting.
Prior to Consumer Duty, there were general principles including Treating Customers Fairly (TCF), alongside specific rules on certain aspects detailed in Financial Conduct Authority (FCA) handbooks, but no general principle covering the service that customers receive.
While the FCA’s attention has been on other areas, most notably price and value, it’s only right that in time, attention will turn to consumer support. Complaints relating to customer service continue to dominate other areas in terms of volume, and financial advisers remain frustrated with the services being offered by platforms and other product providers.
So, what are the key areas that wealth firms need to consider when they look at customer support, and have changes that have been made in the industry going to provide a rosier picture as they bed in?
Transfers
It is easy to sound like a broken record when it comes to transfers, but time and time again, when we look at where complaints come from, and where advisers spent an inordinate amount of time, the answer comes back as transfers.
Why transfers? It’s a combination of factors – including time taken, expectation management and communication. Some things can be done to decrease timescales by improving delivery of the key stages of the transfer or ensuring the customer and / or the adviser get updates regularly about progress. But this is just tinkering around the edges.
If ever there was a need for a new approach to tackling a problem, then transfers is surely it.
Consumer Duty is changing the mindset at firms – with senior leaders becoming much more involved in the key areas where consumers are being let down, and are challenging the status quo.
Digitalisation
Although considerably late to the party, wealth management has gone through most of the pain of joining the digital world.
But has this digitalisation of the wealth industry actually delivered a better experience for customers?
Customer satisfaction scores and other metrics, such as complaints, have not significantly improved. To a certain extent, this is down to customer expectations.
While the wealth management world may have delivered digital services, they have delivered them 10 years behind other industries, and as a result, the consumer has moved on by the time anything gets delivered. In other words, wealth management is offering the consumer what they had in other areas of financial services, or online retail in 2014.
Digitalisation has not meant customers have more access and more information. They may have one or the other, but in general, firms have not created a better experience for customers. For many, being able to talk to a human is still vital, but has been put behind more barriers, such as chatbots. Barriers have also been put in the way of people who want to access digital but may have specific queries before they take an action, or aren’t able to instruct due to limitations in the digital experience.
Consumer support demands that firms take another look at this. There are some areas where firms are taking a lead, including on customer journeys, where they understand how channels can join together to provide a better experience.
Furthermore, how do firms create a more available service? Customers need to find the support they need, when they need it and in their preferred method.
Businesses need to recognise that the world has changed. The way consumers access services continues to evolve, and firms need to be pro-active in adapting to this.
Service delivery
Customers aren’t willing to accept things like delays, errors and lack of customer service anymore.
Too few firms within wealth management have woken up to this fact. The problem is going to get bigger as new digital-savvy customers start to accumulate savings and pensions, and become more active in their investments.
Firms waking up to this is taking longer than expected. Consumer Duty has mandated firms to look at their service delivery, but the reality is that many aren’t using it as an opportunity to really challenge what they define as good levels of service delivery.
Companies risk losing customers to new entrants, and potentially to other sectors within financial services.
Conclusion
While it is expected that the FCA attention to be on some specific areas of consumer support, the impact of that attention is likely to be a wider cultural shift in what is expected from the delivery of services within wealth management.
Initial Consumer Duty implementation may well have focused on getting the metrics correct, but the next step should then be on understanding how and where these metrics need to be improved for the benefit of customers.
As the dust settles on the first year of Consumer Duty, firms need to be ready for the next phase, which has already begun in terms of the FCA enforcement of the rules in regard to price and value. The next phase may provide a greater focus on consumer support and what is required to deliver good outcomes in this space.
By Dom House, lead consultant at Simplify Consulting
