However, Consumer Duty is a “paradigm shift” and one of the biggest changes will be on the evidencing side.
She continued: “Complaints data is not going to be sufficient. You want to be looking at who didn’t proceed with you, who didn’t come back for repeat business. You need to be doing that root cause analysis and finding out why.”
She also noted that another issue to come out of discussion with the Financial Conduct Authority (FCA) was that “consumer satisfaction is not the same as consumer understanding”.
“Consumers doing a survey because they just got the keys to that wonderful dream home and being so thrilled with your service isn’t evidence that they really understood what you’ve sold to them.”
She reiterated that the regulation was all about “putting clients in a position to make informed decisions”.
Consumer Duty is a journey
Timperley added that the “way in” for thinking about Consumer Duty was the end-to-end customer journey.
“You need to put yourself in your client’s shoes and think, ‘what is this journey supposed to look like’? Then you can start using that information to measure whether you actually are getting those good outcomes.”
She continued that gap analysis was important to measure the aims and objectives and performance of the business.
“Closing the gap between the two is the work that needs to be done essentially in approaching Consumer Duty.”
Timperley said that it was crucial to ensure not only that the firm had a good onboarding and initial sales process but that the customer “has the same experience when they ring up to make a complaint as they do when they need to make a claim or they just have a general query”.
“The support you get should be just as good whether you’re somebody generating business from it, or if it’s not going to make you anything.”
Protection space will become more important
The avoidance of foreseeable harm principle would greatly impact the protection space and place increased onus on brokers to have those conversations.
She explained that even though, from a client’s point of view, becoming unwell and unable to work was unforeseeable, the protection industry was designed to mitigate that potential.
She said: “It’s now going to be more incumbent on you than ever to ensure that clients are remembering those protection conversations, understanding why it’s important and if they are declining to go down that route, they’re are doing so from a condition of being well informed as to why it will be needed.”
Good to “apply universal standards”
Timperley continued that whilst Consumer Duty applied to only regulated business, it would “probably be easier for you to apply universal standards across the board” if you are the type of business that does residential and buy-to-let for example, the latter of which is not regulated.
“I think just to avoid the grey areas, it’s helpful to embed this at the level of your overall business rather than trying to tease out certain areas that it [Consumer Duty] may or may not apply to.”
Fall in FCA authorisations
Timperley said that AMI was seeing a fall in authorisations from the FCA and a “big chunk of that is down to credibility”.
“We’ve been seeing very experienced, very well qualified people who are struggling to get authorised because the plan they’re putting together from this product or service point of view is too ambitious.”
Timperley explained that the FCA would be looking at businesses to ensure they were “equipped to deliver the services they say they’re going to deliver” and whether it was “credible”.
“It’s better to go for niche and do that really well than it is to try and be all things to everybody and fall short.”
She continued that the FCA was stressing that “they are not trying to be a price regulator”.
“Making profits, that’s fine. Setting your own rates for different customers, that’s fine. But what they want to see is a fair relationship between the costs and the benefits of what you have to offer and also defining it in advance.”
The Mortgage and Protection Event continues in Southampton and London next week. Register here for your free delegate pass.
