Consumer Duty means specialist finance brokers will need to meet higher standards – FinSpace

All financial firms are required to meet higher customer consideration and accountability standards. There are new rules pertaining to products and services, pricing, and value, as well as consumer understanding and support.

At each stage of the customer journey, organisations should consider their customers’ needs, characteristics, and objectives, including those of vulnerability.

In addition to delivering satisfactory customer outcomes, firms will also need to understand and demonstrate how well those outcomes are being achieved. In addition, it is crucial to emphasise the role and duty of the new FCA requirements on specialist finance brokers.

Price and value ‘key components’ of the new rules

Price and value are key components of the new rules. The cost of a product should be related to the benefits it provides to consumers.

Brokerage fees should not be excessive, and brokers should demonstrate value for money to show compliance with this outcome. For brokers to demonstrate that a product’s price is reasonable compared to the overall benefits the consumer can expect, value assessments are required.

Having correct and timely data and other intelligence on an ongoing basis is key to ensure products and services design meets the target market, can help assess fair value as well as the effectiveness of customer understanding and customer support.

Products should also not adversely affect clients within the target market, especially if they have characteristics of vulnerability.

As a brokerage, we are responsible for understanding our customers and if files show any signs of vulnerability, it’s our duty to take measures and safeguards to provide flexible customer service provision.

Customer satisfaction is paramount for brokers

The importance of customer satisfaction should also be placed high on the agenda of brokers.

Continuous monitoring and evaluation of pre and post-sales activities are essential. It is important for advisers to direct customers toward the correct product, or to provide alternative funding options when possible.

As a broker, it is your duty to make sure your product performs well, and if for any reason the customer wishes to complain there are safeguards in place to help address any problems.

Customer satisfaction will increase if they are educated and have a better understanding of what they are purchasing.

Data analysis and monitoring ‘take centre stage’

Overall, data analysis and monitoring take centre stage. One of the most important aspects of Consumer Duty will be to ensure that the products and services are appropriate for your target market.

Ultimately, this correlates to customer satisfaction and overall requirements. It is imperative to understand how to segment effectively.

While the rules do not mandate segmentation, it is more difficult to demonstrate how firms focus on individual customer needs and meet those needs with the products and services they advise.

Most firms will be serving a range of customers with different needs. Besides compliance, effective segmentation and data analysis will help brokerages track and monitor the quality of outcomes.