Consumer Support

FCA Expectations and what this means for you

The FCA expect firms to provide support that meets their customers’ needs. The support firms provide should enable consumers to realise the benefits of the products and services they buy, pursue their financial objectives and ensure that they can act in their own interests. They adopt a flexible approach when dealing with customers with characteristics of vulnerability.

Businesses should ensure there is appropriate "friction" in their customer journeys to support their customers in making good decisions without creating unnecessary barriers.

Businesses need to regularly monitor the customer support they provide to make sure there are no systemic issues that create unreasonable barriers or costs for customers.

Themes

Testing: Ensuring that teams are able to effectively support customers to achieve good outcomes particularly taking into account any vulnerabilities.

Monitoring: Having processes in place to continuously check the efficacy of pre-sale and post-sale processes and be able to identify any strain on support functions.

Training: This is essential to make sure all areas of the business in contact with the customer, whether directly or indirectly, have knowledge of the processes and systems to achieve good outcomes for customers.

Customer Journey: An end to end documented process that highlights the key customer stages they go through when purchasing a product or service and the communications they receive. This also needs to highlight any sludge, nudge or friction practices.

Governance: This ensures there are the right controls in place to manage and escalate feedback to continue to meet the demands of the customer and help achieve their financial objectives.

Actions to take

Work out what changes are needed to your monitoring activities, including what additional evidence you will need to show compliance, including what additional evidence you will need to show compliance for example, enhancing Quality Assurance (QA) to equip the team with the skills to test the support levels provided to customers.
Think about what training your staff will need so that everyone understands their specific roles in delivering Consumer Duty especially when it comes to supporting a customer.
Have a think about your vulnerable customer processes, are they clear for your staff to follow, do your staff know how to escalate queries so that a resolution can be achieved in a reasonable amount of time.
Consider whether other parties you work with in the distribution chain are aware of their responsibilities under Consumer Duty.
Revisit your policies and procedures to ensure that they are delivering good outcomes for customers.

FAQ's

What Are the definitions of Sludge, Nudge and Friction Practices?

What are Sludge Design Practices and How Can they Cause Harmful Outcomes?

Do we need to Provide Multiple Channels of Support to customers?

What monitoring does the FCA expect firms to do to ensure they are providing an appropriate level of support to customers and what types of data should they be using?

What training resources are available?

Sludge: Sludge refers to any unnecessary or excessive steps that prevent consumers from making informed decisions about financial products or services. This could include complicated application processes, hidden fees or charges, or confusing language in contracts or agreements.

Nudge: Nudge refers to any measures taken by financial services providers to encourage consumers to make choices that are in their best interests. These measures could include providing clear and simple information about products and services, offering guidance or advice, or making it easier for consumers to compare different options.

Friction: Friction refers to any obstacles or challenges that make it difficult for consumers to switch to a different financial product or service. This could include high exit fees, long notice periods, or other barriers that discourage consumers from making changes. In some circumstances, friction points or nudges can help to mitigate the risk of consumer harm and support good outcomes, but they can also create unreasonable barriers by making it more difficult for customers to act in their interests.

This is where businesses include friction in their customer journeys that discourage customers from making decisions in their own interest, by doing things they might prefer they didn’t, eg. designing a long-winded complaints process with lots of extra steps which may deter a customer from proceeding with the cancelation. These types of practices hinder a customers’ ability to achieve good outcomes.

The FCA don’t prescribe which channels of support a business must offer and don’t necessarily expect that support will always be provided via each individual customer’s preferred channel. The critical point is to ensure that support is always effective in meeting the needs of customers. Firms need to review which channels they are using and make any adaptions to ensure that they can deal effectively with any non-standard requests and with customers who may find themselves in vulnerable circumstances.

Refer to guideance in section 9.53

Monitoring how we interact directly with our customers is key. There are many different data sources that cover this area eg. Customer behaviour data, the way they use a product, complaints, average call waiting times, call abandon rates, listening exercises, satisfaction surveys, amongst others.

Refer to FCA webinars and Information for Firms

Further communications available on the ALPHERA Partner Hub