expectations’ and its vital that every firm serving retail consumers introduces an improved approach to consumer protection that is centred around the active delivery of good customer outcomes.
Making sense of the changes can be complex but with The Duty coming into force on 31st July, we caught up with Uinsure’s Chief Governance Officer, Brionie Hemingway, who has helped to shed light on exactly what firms have been asked to do.
What worked well in preparation for Consumer Duty?
The Duty is very broad but breaking it down into manageable chunks and prioritising certain elements of the work was key for us but, in addition to that, it is invaluable to talk to partners about how you can support each other.
If you take the Fair Value Assessment as an example, it’s important to understand how each party in the chain – whether that be insurer, distributor or manufacturer – is supporting value and how they’re supporting customers’ financial objectives. Fair Value as an outcome, is a combination of efforts from all parties to joined up understanding is important.
How do you demonstrate a customer outcome?
This is a bit of a holy grail within the industry and has typically been evidenced through the likes of NPS scores, as one example, but there can be a lot more to it.
I think it’s really important to use both qualitative and quantitative information, so you have in-depth data together with wide ranging case studies that support the consumer metrics to paint a collective picture.
How do you continually prove fair value?
GI firms will already have grappled with fair value, but it is still a fundamental part of the new Consumer Duty; fair value isn’t the same thing as offering a rock bottom price though. It’s about reasonable remuneration for work done or service delivery. Price is one aspect of value, but quality of cover and accessibility of services are really relevant too.
We believe assessing fair value involves a detailed process of weighing up the cost to serve and the utility of products versus the amount of money actually leaving the customer’s pocket.
Continuous holistic assessment is needed because factors like customer circumstances, technology and the wider market are changing all the time. Services like claims processes and access to useful add-ons are features that can add value, or just as easily detract value, so keeping on top of service provision fits right into the value assessment.
Can you ever be fully compliant or is it an ongoing exercise?
This is a really important point. Every time new regulation or initiatives come into force, firms naturally spend a lot of energy getting ready for the ‘go live’ date and can then have something of drop off while other business priorities come back to the fore.
With the new Consumer Duty, elements like the delivery of outcome are going to be very much an ongoing exercise and one that is always evolving as the industry itself changes and the technology we use continues to improve.
The FCA has already made it clear that Consumer Duty will be an ongoing feature and we need to deliver a report to the board on an annual basis to evidence we are continuously meeting the standards. As a result, it should really form part of the fabric of all organisations from here on in – if it isn’t already.