"Concerningly, 11% of senior decision makers said they didn’t know anything about the new regulations, with 4% only informed through the interview itself."
Two in ten (22%) of senior decision makers at banks and building societies do not think they will become Consumer Duty compliant before April, the original deadline set by the FCA, according to new research from Moneyhub.
While a third (32%) of banks and building societies are confident that they are compliant, the remaining two thirds are not. This is despite 87% of senior decision makers agreeing that this new regulation will have a significant impact on how they do business. Out of all the FCA-regulated businesses interviewed by Opinium on behalf of Moneyhub, those in the banking sector felt the new regulation would impact them the most.
Concerningly, 11% of senior decision makers said they didn’t know anything about the new regulations, with 4% only informed through the interview itself.
The FCA’s new regulations are to ensure that customers receive communications from financial services firms that they understand, and are being offered products that meet the individual’s need at the point of sale and throughout the entire product lifecycle, offering fair value and providing support when they need it. Importantly for FCA regulated companies, these regulations will eventually affect firms’ current book of business rather than just new business. This in itself will prompt a re-evaluation of products that current customers are on and whether they are still appropriate.
When asked what was the most challenging aspect of this new regulation, a third (33%) said that ensuring communications equip consumers to make effective and timely decisions about their finances was the most burdensome part of the regulations. A further quarter (27%) said that offering specialised products and services that met the needs of the customer would be the most challenging and the same proportion (27%) said offering customer support that met the needs of the consumer.
However, technology, in particular Open Finance, presents a solution to many of these challenges. Over half (53%) said they’d be investing in technology to develop and deliver more personalised and targeted communications. A further 43% planned to invest in technology to access customer data and insights.
Samantha Seaton, CEO of Moneyhub, commented: “Consumer Duty is so much more than a box ticking exercise. Inflation, ease of accessing credit, rocketing cost of borrowing, and our move towards a cashless society all have a massive impact on the financial resilience of people. Finances for most are incredibly confusing and stressful. Most of us no longer physically interact with money, which is also adding to the confusion and stress about managing money.
"With Consumer Duty the responsibility shifts from the consumer to us, the financial services industry, and in particular the product providers. When it comes to consumers’ finances, we as an industry are in a position of strength because we do know how money works, however we will only get this right if we have an aggregate view of the customer.
"Open Finance solves this challenge. With Open Finance you get an aggregate financial view of the consumer and with their explicit permission. This means Open Finance enables banks and building societies to have a true understanding of their customer and be able to prevent any foreseeable financial harm, one of the key cross-cutting rules of Consumer Duty.”
