Strategy and Change Director
What is the new consumer duty?
In essence, this new duty is about setting a higher standard. One that requires firms to put consumers at the heart of their business and focus on delivering good outcomes. The duty is made up of a new Consumer Principle (Principle 12), along with a set of rules and guidance detailing expectations.
Principle 12 states ‘A firm must act to deliver good outcomes for retail clients’. This means businesses of all sizes must act in good faith and avoid causing foreseeable harm, while enabling and supporting customers to pursue their financial objectives. It’s not just about doing the right thing for the client, it’s about being clear on what you’re doing and why.
How does it impact you and your business?
The focus is going to change from individual parts of the distribution chain towards a more holistic perspective. You’ll already be starting to familiarise yourself with the new regulation and you can use this to review your current processes. Consider how this looks through the eye of a consumer. Ask yourself:
• How do you communicate currently with your clients?
• Do the products you sell offer fair value?
• How do you store data and document conversations?
• How do you support your client from a post-sale or claims perspective?
• How often do you check in on your client to see if their circumstances have changed and if their insurance is still fit for purpose?
• If you don’t sell a certain protection product, are you referring your client?
From this information you’ll be able to build a plan of anything you need to adapt and change including your services, policies, and processes to meet the regulation.
The good news is a lot of advisers and firms we work with are already delivering a high standard of service to their clients and put consumers at the heart of everything they do. And it may be more a case of documenting or evidencing this, as opposed to adapting new ways of working.
Firms will need to apply the duty to new and existing products and services that are open to sale or renewal from 31 July 2023; and to products and services held in closed books from 31 July 2024.
How does it impact your clients?
Ultimately, the new regulation should ensure better customer outcomes across the industry. The expectation is fewer complaints about products not meeting customer needs. Along with improved conversations and discussions around the need for insurance. This in turn, should increase consumer’s trust for the financial services industry.
How does The Exeter comply with the consumer duty?
The Exeter welcomes the introduction of the duty. As a mutual insurer, we have always set ourselves high standards for delivering good outcomes for our customers. The new principle is already well aligned to our goals and business model. Designing products that are fit for purpose and offer fair value has always been our aim. As has helping our customers understand and use our products.
Each of our business areas have their own metrics, designed to ensure customers receive appropriate levels of service in both quality and response times.
All our written communications go through an approval process and require sign-off from Business Managers. This is so we can ensure we’re clear, fair, and not misleading. We also tailor our communications by considering the characteristics of the recipient.
We don't use scripts when taking calls, and we certainly don't target the length of time we speak on calls. It’s important to us that we tailor responses to each customer when they want to speak to us.
We recognise that all our customers could become vulnerable at any stage, particularly when claiming. That’s why we’ve set up a forum, with representatives from all business areas to share thoughts and best practices on treating customers, in vulnerable circumstances, fairly. To further demonstrate our commitment, we have worked closely with the Financial Vulnerability Taskforce to adopt the 'Vulnerable Customers Charter'. This is made up of nine statements to help promote understanding of vulnerability and encourage the right sort of behaviours.
Whilst we have always set high standards, we are not being complacent and recognise there is always more we can do. We've looked carefully at the FCA guidance and have started to piece together an implementation plan. We’ll start by updating our governance policies, training our people so everybody is clear on the standards expected, and re-evaluate the management information we receive to measure good outcomes.
We are investing in technology with the aim of improving the end-to-end customer journey. This started with a review of all customer touchpoints, including the critical claim stage. We also recognise the need for consumer education and are looking at ways to further support your conversations with client facing material.
You matter more
Our purpose is to provide more people with more peace of mind in a more uncertain world. We want to support you by giving you the tools you need to have the right conversations, recommend the right providers, and discuss the right products.
To find out more about recommending our products or using our tools to support your conversations, you can book a personalised briefing with one of our Account Managers.