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Do your price and value outcomes align with Consumer Duty? Here are 5 ways to make sure they do!

Nic Dent

Nic Dent

Nic is highly experienced in implementing people centric compliance and performance management solutions. Aside from his responsibilities within the market and product strategy function, Nic spends the good share of his time advising clients through the pre-sales stages and in project to help firms embed software implementations that deliver their requirements and deliver regulatory change.

As the final implementation deadline for the FCA’s Consumer Duty draws closer, the pressure is on for firms to create and evidence the measures they’re taking to provide consistently good customer outcomes.  

And generally firms seem to be doing this well, with the Consumer Duty firm survey results for Autumn 2023 finding that almost half (43%) of firms reported that they weren’t having any difficulty implementing any aspects of the Duty. However, there are still some areas where firms seem to be falling short.  

Where are firms at with Consumer Duty? 

In February, Sheldon Mills, the FCA’s Executive Director of Consumers and Competition explained that there are still issues around price and value outcome. More specifically, that there aren’t many fair value assessments being conducted, with firms neglecting to take solid data and other credible evidence into account when setting the price of a product or service.  

These firms aren’t only struggling to justify prices of their open products (new and existing products and services that remain open to sale or renewal), but also to closed products (those being sold throughout the financial services sector before July 2023 and are no longer being sold).  

From the update, it’s clear that some firms are taking a simplistic approach to the value and price aspects of the Duty, which will need to quickly change ahead of July. 

What can firms do? 

Despite value and price being just one part of the obligations that firms are bound by under Consumer Duty, it’s important that you’re ensuring your products and services pricing matches up to what value you’re delivering. And this will continue to be an ongoing challenge for firms to refine moving forward. 

1. Acknowledge that it takes teamwork

It can be easy to get wrapped up in the idea that Consumer Duty requirements fall with your compliance team. But firms need to recognise that it’s not just a compliance team’s responsibility to meet and implement the Duty and understand that other business areas can provide valuable contributions too. 

Having a mutual understanding of the end goal is the only way to ensure everyone is working towards the same thing and ensuring perpetual compliance is met.  

2. Focus on feedback

One way to ensure your pricing and value aspects are in order is to gather information about the products you’ve already sold—and customer feedback. Firms need to be welcoming feedback so they’re able to create the consistently good outcomes that the Duty demands. They could do this, for example, through feedback surveys, reading online reviews, or analysing any call logs for mention of feedback in relation to these areas.  

Beyond customer satisfaction being a great indicator of your firm building towards good customer outcomes, it’s also a great strategic asset, too. For example, across the retail industry, all sectors and verticals thrive on delivering customers’ satisfaction expectations in line with quality, value, and complaint handling. Having this feedback available means your firm can then focus on optimising satisfaction that’s relative to customer expectations and the required company resources to deliver these outcomes. In doing so, firms will be complaint and performant, ensuring good governance and consistency across their product portfolios.  

3. Accept when change is needed

There’s a national bias that seems to be holding firms back from properly adhering to all aspects of the Duty—namely the price and value outcome. This is because firms are taking the position of trying to validate that they’re already doing the right thing, when in reality, they’re falling short of what the Duty is trying to implement.  

While nobody wants to drop their product or service price for fear of a drop in profits, if you can’t justify to the FCA that your pricing is equivalent to the value the product/service offers, you’re at risk of being non-compliant.  

But taking the approach that this is something you have to do, and nothing more will set you back. Firms should be leveraging regulatory change for their own benefit. By implementing an effective product governance framework, you can improve your firm’s ability to compete, and its ability to service clients. When this is done well, customers, businesses, risk management, compliance and control functions all benefit!

4. Take meaningful action

While capturing data is important and challenging in itself, the FCA are far more concerned with what firms are actioning off the back the data once it’s collected.  

For example, financial services sector businesses are often taking a mid-range pricing strategy, by looking at what others in the space are doing, rather than interpreting what their customers want and need. In doing this, they’re neglecting to tap into what could make them more profitable down the line. Your customer feedback tells you everything you need to know first-hand, from the people who already use your products and services. Giving them opportunities to have their say can ultimately improve your profitability in the long-run.  

5. Let technology lead the way

Navigating the ever-evolving regulatory landscape can be difficult, but technology can help keep you on the straight and narrow. According to the regulator’s position and guidance, firms must undertake fair value assessments to demonstrate the price they are charging customers is reasonable compared to the benefits they receive from that product or service.  

Neglecting to establish a holistic approach to governance, can create an oversight of the relationship between product, supplier/manufacturer, and customer. So, by utilising insight and feedback that comes from a whole range of data, facts and analysis from across the entire supply chain and network operations(s), you can ensure you’re meeting the requirements.  

Many firms are now leveraging purpose-built technology solutions that assist with accessing reliable and accurate data that spans the width and breadth of their company. In doing so, firms can underpin their product governance frameworks and enable active oversight of a product’s ongoing growth strategy, compliance, risk management, and ultimately, the protection of product trust.  

We know keeping on top of regulatory change is difficult. That’s why we designed our RegTech solutions to strengthen our clients’ approach to governance, risk, and compliance—maximising their operational efficiency for the long haul.  

We have a range of tools and technologies that can be tailored, deployed, and used tactically, spanning much of the regulator’s guidance on monitoring and useful data/information sources relating to Consumer Duty,  including: 

  • Product governance 
  • Business persistence 
  • Behavioural insights 
  • Training and competence records 
  • File reviews 
  • Customer feedback 
  • Complaints 
  • Compliance-related reporting

 

Want to find out more about how Worksmart can help you? Get in touch at info@worksmart.co.uk or book a meeting with our friendly experts. 

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