How will the new Consumer Duty Act impact businesses?

Back in 2021, the FCA announced its intention to bring in a fresh set of rules to implement new standards of fairness for consumers. Every business in the financial services industry will have to adhere to the Consumer Duty Act when it comes into force in 2023. In this article, we’ll take a closer look at what this new Act means for the financial sector and how you can start to prepare for it now.

What is the FCA Consumer Duty Act?

The FCA have updated their rules by providing clearer standards and expectations when it comes to putting customers’ needs first. The new legislation comes into force in July 2023 and is called The Consumer Duty Act (PS22/9). 

In essence, the FCA Consumer Duty Act is:

– A new Consumer Principle that requires firms to act to deliver good outcomes for retail customers.

– Cross-cutting rules requiring firms to act in good faith, avoid causing foreseeable harm, and enable and support customers to pursue their financial objectives.

– Four Outcomes rules requiring firms to ensure consumers receive communications they can understand, products and services meet their needs and offer fair value, and the support they need.

Why has the Consumer Duty Act been introduced?

The FCA is introducing the Consumer Duty Act to protect customers and make sure they’re treated fairly when dealing with businesses in the financial industry. The FCA has recognised that consumers are not always receiving the correct level of service and these lower standards are then often becoming the norm across the sector.

The FCA want to see a higher level of consumer protection in retail financial markets, where companies actively compete and innovate in the pursuit of delivering better customer outcomes. The FCA also want companies to understand their customers’ needs and be able to flexibly support them so that consumers get good outcomes.

The Consumer Duty Act will be focused on improving outcomes for consumers using four outcome objectives:

• Value – consumers receive fair prices and quality
• Suitability and treatment – consumers only receive products and services for which they are suited and receive good treatment during that process
• Confidence – consumers have strong confidence and levels of participation in markets
• Access – diverse consumer needs are met

What is changing with the introduction of the Consumer Duty Act?

The Consumer Duty Act will bring in a new set of rules which will revolutionise the way the financial industry considers consumer outcomes:

• A new Consumer Principle that requires firms to act to deliver good outcomes for retail customers.  
• Cross-cutting rules providing greater clarity on our expectations under the new Principle and helping firms interpret the four outcomes 
• Rules relating to the four outcomes we want to see under the Consumer Duty. These represent key elements of the firm-consumer relationship which are instrumental in helping to drive good outcomes for customers.

The Act’s rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, companies will need to understand and evidence whether those outcomes are being met.  

Who is impacted by the Consumer Duty Act?

The FCA has published a list of stakeholders it believes will be impacted by the introduction of the Consumer Duty Act and they are:

• Regulated firms, including those in the e-money and payments sector  
• Consumer organisations and individual consumers 
• Industry groups/trade bodies 
• Policy makers and regulatory bodies 
• Industry experts and commentators 
• Academics and think tanks 

When does the Consumer Duty Act come into force?

The FCA want the Consumer Duty Act to be in effect as soon as possible, but also understand that some companies will face challenges when implementing the new rules and guidance. It has been agreed that the Act will come into force on a phased basis:

31 July 2023 – New and existing products or services that are open to sale or renewal

31 July 2024 – Closed products or services

How can contact centre technology support the Consumer Duty Act?

Contact centres will play a critical role when it comes to companies successfully meeting the rules and guidance under the Consumer Duty Act, so leveraging the most effective technology now will help financial organisations to comfortably meet the deadlines for implementation.  

From the automation of quality management across every interaction to compliance alerts and vulnerability checks, the most innovative contact centre technology helps regulated businesses keep pace with their regulatory obligations and deliver good outcomes for their customers.

Here at Awaken, we specialise in Real-Time Agent Guidance and Post-Interaction Analytics software. Our dynamic solutions give agents and contact centre operations teams all the tools they need to deliver exceptional customer experiences, tangible efficiency benefits and reporting data.

Using Post-Interaction Analytics to improve quality outcomes

Often contact centres can only quality check a small percentage of their total interactions. Conversational analytics, or interaction analytics as it’s sometimes known, is the use of analytics technology in contact centres to monitor performance metrics on 100% of customer interactions, regardless of the channel preference.

Our Conversational Analytics solution can help you to adhere to the Consumer Duty Act by:

• Spotting vulnerability – Helping your agents to understand the emotional state of the customer
• Providing compliance support – Monitoring compliance and fraud statements to ensure these are accurately represented to the customer
• Reducing training times and improving wellbeing – Empowering agents with the right tools when they need it and monitoring their wellbeing to help make timely interventions 
• Improving processes – Identifying common bottlenecks in processes so that customer journeys can be swiftly improved

The use of Conversational Analytics technology provides businesses with an intuitive tool that drives the improvement of quality outcomes for customers. Importantly, it also enables an easy way to share specific data with the FCA to evidence the approach taken to improve consumer outcomes.

How Real-Time Agent Guidance protects consumers

Contact centre agents often act as the conduit between a business and a customer. They’re responsible for making sure the customer interaction reaches a positive outcome and delivers a memorable customer experience, all while adhering to necessary process and regulatory requirements.

By using intuitive software that can guide agents to the next best action in real time, businesses benefit from:

• Better customer outcomes – The agent can spend more time focused on the customer and delivering a great experience 
• Compliance – The agent is automatically guided through the correct procedures and compliance steps that they must follow
• Reduced call times – Typically businesses using advanced agent guidance software can see up to 50% reduction in their average handling times

The use of Real-Time Agent Guidance technology acts as an integral part of your broader compliance strategy. It also aligns perfectly to the aims of the Consumer Duty Act because agents are free to focus entirely on the customer experience while the guidance technology leads them through the correct steps. Real-Time Agent Guidance help companies to treat customers fairly and deliver good outcomes through every interaction. 

Talk to Awaken about how technology can help you adhere to the Consumer Duty Act

If your business is actively planning for the Consumer Duty Act then there’s never been a better time to think about the technology in your contact centre.

As the front line with customers, giving your agents and your operational teams the right tools could make all the difference when delivering better outcomes and spotting vulnerability. 

Awaken’s contact centre technology was designed for non-technical teams. Our software reduces your reliance on IT and makes sure your processes can adapt to new regulations as quickly as your business needs.

Get in touch with the Awaken team today if you’d like to know more about our contact centre solutions.