Three key areas of focus
The FCA has identified the following as areas for motor finance firms to focus on, in the next few months.
Make sure your business is prioritising effectively, with a focus on reducing the risk of poor consumer outcomes. Firms should also identify those areas where they are currently furthest from the objectives of the Consumer Duty and develop a plan to bring this area in line with the new requirements.
Using your current complaints data and root cause analysis can help in this space. Highlight those areas that cause your customer the biggest problems and confusion then develop a plan to resolve them. Reviewing past, present, and future trends can add huge value and insight to both short and long-term plans to improve outcomes for consumers.
We have seen the huge difference data can make to business planning and operations and you can read more about how to make best of your data in our whitepaper.
Embedding the substantive requirements
Firms should remind themselves of the substantive requirements of the new Duty and identify where they go above and beyond what is currently required.
The FCA has seen some evidence of overconfidence in this space. Some firms believe that current policies and processes will also cover the new requirements when, in reality, they are likely to fall short. Firms should be able to identify and evidence changes needed to meet the new standards. They should do so as part of their review process of products and services, communications, and customer journeys.
As a reminder, the new and enhanced requirements contained in the Consumer Duty (from the Finalised Guidance) are:
- Firms to act to deliver good outcomes for retail customers.
- Firms must act in good faith towards customers, avoid causing them foreseeable harm, and enable and support them to pursue their financial objectives.
- Firms should consider the diverse needs of their customers – including those with characteristics of vulnerability.
- Products and services are designed to meet the needs, characteristics, and objectives of a specified target market.
- Products and services provide fair value with a reasonable relationship between the price consumers pay and the benefit they receive.
- Firms communicate in a way that supports consumer understanding and equips consumers to make effective, timely, and properly informed decisions.
- Firms provide the support that meets consumers’ needs throughout the life of the product or service.
Working with other firms to achieve results
The FCA recognises that full implementation of the Consumer Duty is a substantial piece of work that firms cannot do alone. Many firms need to work and share information with other firms in their distribution chain. However, it has been noted that some may need to speed up their efforts in this area to implement the Duty on time.
With motor finance firms, the FCA recognises the challenges around the control of dealer networks and oversight of these by the lender, with reference to the adequacy of point-of-sale information. There are also other options to consider in support of both the insight required to identify areas of improvement, and the resources required to support changing processes and policies.
This is where EQ can help. Both in the short term, as you prepare for the Consumer Duty, and in the long-term; as you fully embed the enhanced consumer focussed approaches and cultural changes the Duty requires.
In sum, at EQ, we help firms to better understand their consumers with our complaints and feedback insights analysis. With us you can improve customer-focused processes and journeys with our technology. You can provide a superior customer experience with our highly trained specialist resource team. At EQ we are the experts you can rely upon to deliver exceptional customer outcomes and resolutions.