The FCA has released its findings following a review of how banks are implementing the Duty. The results are relevant to banks, building societies and mortgage providers. But, there are lessons here for all firms applying the Duty, and those deep in preparations for closed book products. We’re just seven months out from the next deadline. 

Our focus is on the finding around evidencing the outcomes for vulnerable customers. The regulator said: “While some firms considered treatment of vulnerable customers within their reviews of products and services, this was lacking in some firms’ documentation.” The July 2023 deadline was a staging post in a never-ending journey. The onus was on your firm to evidence good outcomes – from day one. Some banks clearly still have work to do this. 

 “While some firms considered treatment of vulnerable customers within their reviews of products and services, this was lacking in some firms’ documentation” – FCA

In this article we also discuss why some financial services firms are on the back foot when it comes to building outcomes evidence – for all customers. We walk you through the reasons why customer feedback, a critical part of the management information (MI) that sits behind your outcomes assessments, will help you close the evidence gap. Assessments need to be reviewed by your board at least once per year. Documentation needs to be available on request to the FCA. The regulator found that some firms were relying on a statement that they had found no harm, with no supporting evidence. This is not enough to satisfy requirements. As Ed Smith, Head of Competition Policy at the FCA explains: “Without the information or the evidence, it’s not really possible for firms to know that they’re meeting the requirements under the Duty.” 

What does your firm need to do?

For vulnerable customers, you’re required to do two things:

• Evaluate vulnerable customer experiences, identify where needs have not been met to make improvements. 
• Produce and regularly review your management information on the outcomes they are delivering for this customer group.

Why are some companies on the back foot?

Three reasons why firms struggle to build outcomes evidence for all customers.

1. Existing CX measurement frameworks don’t go far enough

If you’re relying on existing measurement frameworks and established metrics like CSat, NPS and retention rates you could already be disadvantaged when it comes to measuring and evidencing the four outcomes. 

These types of transactional metrics are a passive snapshot of how a customer felt – in the moment. There is no clear link on the root cause of an issue or the action required to fix issues and improve what customers experience. High levels of customer satisfaction, a willingness to recommend or stay aren’t necessarily indicators of a good outcome. 

You’re also still left with the question – how do we identify, correct and prevent poor outcomes?

2. Improving customer experience requires real-time feedback and data-driven insights

Firms are finding that existing MI is not enough to provide organisation-wide real-time insights into processes, procedures and approaches to prioritise plans to improve outcomes. Just over a third of banks (35%) cite access to real-time data as a top CX challenge, according SAS and the CMO Council.

The FCA noted that in better practices, firms recognised they needed a wider range of data than they had for their existing MI to provide insights into key areas. 

The regulator also said: “We found firms that used a range of data points, rather than relying on a single source of insight in their review, were better able to consider different types of customers, and outcomes for customers in different scenarios. These firms were able to clearly identify areas requiring improvement or remediation in line with the Duty.”

3. A lack of CX maturity

Research on CX maturity from The Financial Brand found that ‘the implementation of new technologies persists from lower to higher stages’. But just 25% of ‘Starters’ were investing in new technologies. The figure stood at 62% for ‘Managers’, 86% of ‘Achievers’, 93% for ‘Accelerators’ and 100% of ‘Leaders’. Some businesses aren’t moving fast enough and don’t have the right strategy in place to ensure they are able to capture data and intelligence on distinct customer groups. 

Closing the gap through customer feedback

As discussed earlier, it’s vital that you consider how customer feedback fits into your overall approach. Your management team needs to show that they have understood the feedback from customers (and their team) and used it to refine your offering. Progress never ends and you need to be ready to repeat the cycle again, and again.  

Here are a few questions to help you gauge your capabilities.

• Are you capturing the feedback of distinct groups based on characteristics of vulnerabilities, or other commonalties? 
• Are you able to identify trigger points, either transactional or relationship, to capture feedback. These may be at the points of highest risk of potential harm. 
• Thinking about your customers’ end-to-end journey, how does each touchpoint align with the four outcomes of the Duty?
• What are the root causes of poor outcomes? How do you fix these and document interventions? Are we tackling breaches early enough?
• Are you able to close the loop, evidence interventions, and monitor the impact of those interventions?
• Are you listening to staff feedback to help you understand what customers go through?
• Do stakeholders across the business have a segmented view of the data and the insights they need drive CX improvements?
• Do you have the evidence to share with your board, and the FCA, that you’re meeting good consumer outcomes, and making interventions to fix poor outcomes. 

That’s plenty to think about for now. Learn more about the FCA’s other review findings here.

What’s next?

We’re already helping firms like yours improve the way they measure and evidence outcomes. Get in touch with Charlie Williams to find out more.