Firms turn to tech and data to solve Consumer Duty woes as 38% admit limited knowledge of new legislation
Firms are overwhelmingly turning to technology in order to surface data and insights that solve the challenge set by the FCA’s new Consumer Duty according to new research from Moneyhub, the Open Finance, Open Data and Payments platform, conducted by Opinium. In its new report FCAConsumer Duty: Business Burden or Golden Opportunity? senior decision makers (CEOs, Chairman and Board Directors) were interviewed on their preparedness ahead of the first Consumer Duty deadline at the end of October.
While alarmingly there was a significant knowledge gap across many firms; 38% of senior decision makers said they had either limited or no knowledge of the upcoming consumer duty legislation, with some only alerted to the legislation by the Moneyhub research, there were also signs that firms were getting their plans in place.
22% of firms had projects in place in order to meet the deadline in 2023, and a further 28% are currently developing plans to become compliant.
For many of these firms, technology held the key to Consumer Duty preparedness. 48% of firms plan to or are already investing in technology to develop and deliver more personalised and targeted communications. And 41% also have plans to invest in technology in order to access customer data and insights.
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’ 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.
A thorough understanding of your customer is a key challenge for many businesses, without Open Finance providing the consent-driven data insights businesses will struggle to gain the information they need to meet their obligations under the Duty. And firms are ready to invest ahead of the July 2023 deadline, with 1 in 4 firms (23%) saying they will invest more than £5m to make the most of the opportunity.
Samantha Seaton, CEO of Moneyhub comments: “There are no excuses left, businesses must ensure they understand their customer completely in order to offer products and services that fit their circumstances throughout the entire duration of their relationship. And the only way this is possible is with an ongoing holistic view of their customer’s financial universe. Open Finance truly holds the key for firms to meet Consumer Duty. But to see Open Finance’s role as solely a solution to a problem is a mistake. It is also an opportunity.
“By better understanding your customer, it means you can offer super relevant, appropriate products and services, and ultimately create stronger relationships and build loyalty. Smart, forward looking businesses will seize this moment and reap the benefits of truly understanding their customer.”