Firms invest in tech to comply with new Consumer Duty
Firms are turning to technology to comply with the Financial Conduct Authority’s new Consumer Duty, research has found.
Open finance platform Moneyhub commissioned Opinium to interview senior decision makers in financial services firms about their preparedness in complying with the new Duty.
38 per cent of respondents said they have either limited or no knowledge of the upcoming consumer duty legislation, while some were only alerted to the legislation by the Moneyhub research.
However, 22 per cent said they had plans in place, while a further 28 per cent are currently developing plans to become compliant.
Technology was cited as a key component in complying with the new rules. 48 per cent of firms aid they plan to, or are already investing in, technology to deliver more personalised communications.
Meanwhile, 41 per cent have plans to invest in technology in order to access customer data and insights.
Furthermore, 23 per cent of respondents said they were willing to invest more than £5m to meet their obligations.
The City watchdog unveiled its long-awaited Consumer Duty on 27 July. The policy aims to improve how regulated firms – including peer-to-peer lending platforms – serve customers.
The FCA said that the new rules will “lead to a major shift in financial services” by setting higher and clearer standards of consumer protection.
It requires for firms to end rip-off charges and fees, make it easier to switch or cancel products, and provide helpful and accessible customer support. Firms much also provide more clarity on their products and services, rather than burying key information in lengthy terms and conditions.
Read more: New Consumer Duty is “a Trojan horse”
The FCA is giving firms 12 months to implement the new rules.
“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,” said Samantha Seaton, chief executive of Moneyhub.
Read more: Open banking will ‘complement’ credit bureau data under Consumer Duty
“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.”
