In the ever-evolving landscape of financial services, the need for consumer protection measures has never been more paramount. The introduction of the Consumer Duty regulations by the Financial Conduct Authority (FCA) in the UK is a testament to the industry's commitment to prioritising customer interests. As marketers, we can be at the forefront of this change.
Understanding Consumer Duty
Consumer Duty, which came into effect on 31st July 2023 for new and existing products or services, and 31st July 2024 for closed products or services. Primary objective of Consumer Duty is to set higher and clearer standards, requiring firms to put their customers' needs first. FCA’s 2020 Financial Lives survey, found only 10% of consumers ‘strongly agreed’ that they had confidence in the UK financial services industry, with a further 32% ‘slightly agreeing’. Only 35% of respondents agreed that firms are honest and transparent in their dealings with them.
The Four Outcomes of Consumer Duty
At the heart of Consumer Duty are four outcomes that firms must strive to achieve:
1. Products and Services: Firms should offer products and services that are suitable for the customer's needs and are delivered as expected. This includes considering a customer's characteristics and financial situation.
2. Price and Value: T'he price of products and services should reflect their true value. Firms need to be transparent about fees and charges and avoid any misleading or hidden costs.
3. Consumer Understanding: Customers should be equipped with the information they need to make informed decisions. This means providing clear and understandable communication about products, services, and associated risks.
4. Consumer Support: Firms should offer helpful and responsive customer support. This includes making it easy for customers to get help, complain, or switch providers. There should be no unnecessary obstacles throughout the customer journey.
The Marketer's Role in Delivering Consumer Duty
As marketers, we play a pivotal role in ensuring that our organisations embrace a customer-first mindset through every aspect of business operations. Our expertise in understanding consumer behaviour, crafting compelling narratives, and leveraging data-driven insights, positions us, as invaluable assets in delivering positive customer outcomes.
1. Understanding the Customer Journey: By mapping the end-to-end customer journey, we can identify touchpoints and opportunities to enhance the overall experience, ensuring that the right communication is in place to meet customer needs. For example, conducting user testing or journey mapping exercises can help identify potential pain points and areas for improvement, enabling us to proactively address customer concerns.
2. Developing Customer-Centric Communication Strategies: Our ability to craft clear, concise, and engaging communications is essential in fostering consumer understanding and building trust. By leveraging insights from customer research and feedback, we can tailor our messaging to resonate with diverse customer segments, including those who may exhibit characteristics of vulnerability. To develop clear customer communications we can obtain direct feedback from customers on new or existing communications that may be used throughout a certain process that is being reviewed as part of the Consumer Duty. This approach allows us to identify gaps and gather ideas from customers on how to best develop communication that are clear.
3. Leveraging Data and Insights for Personalisation: With access to customer data, we can personalise our communications, ensuring that they meet the, needs of the customers. For example, by using data on a customer's specific product details such as, monthly payment amounts, and payment dates, we can tailor our communications to provide relevant and personalised information about payments. Instead of generic prompts like "pay in the next 10 days," we can directly state the exact payment due date, eliminating uncertainty and driving better response rates.
4. Collaborating with Cross-Functional Teams: As marketers, we are well positioned to facilitate cross-functional collaboration, by sharing customer insights and feedback to inform better decision-making at every level. For instance, by working closely with product, operations teams, we can ensure that customer needs and preferences are taken into account during the product and process development, resulting in product proposition that resonates with the target market.
5. Test and Learn: Wherever possible, we should set up test and learn exercises to gauge customers responses to communications. As marketer’s, we can then use this insight to continuously improve the customer communications as Consumer Duty, is not a one-and-done[5] exercise it is an ongoing process.
As marketers our ability to understand customer needs, leverage insights, collaborate cross-functionally, makes us a key asset to successfully deliver Consumer Duty for our organisations and help cultivate customer first mindset.
