What Insurers and Intermediaries might have missed as they plan and prepare ahead of the FCA’s new Consumer Duty introduction – by Donna Hunt
The watershed policy from the FCA, their new Consumer Duty, will come into force on 31 July 2023 for financial products which are for sale or renewal, and 12 months later on 31 July 2024 for closed products or services. It marks a pivotal moment for regulation where, for the first time, ensuring good customer outcomes becomes the purpose of the financial services industry, not just an afterthought or a by-product of former initiatives such as TCF and the customer principle. Those words are important. Where we used to have to treat customers fairly, we now need to ensure good outcomes. Where there used to be a principle to ‘pay due regard to the interests of customers’, principles being always open to interpretation, it has now become a duty, a mandate, a responsibility.
The new Duty is part of the financial watchdog’s objective to drive higher and clearer standards of consumer protection, a move which will require financial services organisations to embed the new rules firmly into their ways of working.
As part of our customer service offering to financial services businesses, we have been closely studying what the Duty and its different parts will mean in practice – including the type of expert support and value we, as an FCA Authorised business ourselves, can provide to UK insurance firms and brokers to ensure they don’t fall foul of the new rules.
The insurance sector recruitment challenge
UK insurance businesses are already busy analysing their products, processes and policies against the Consumer Duty – studying the fine details and how it might compound issues for those who are already struggling to plug skills gaps and address staff shortages, two major factors impacting customer service in the current UK climate.
The new Duty will demand higher levels of competence and intuition from frontline agents as they are required to pro-actively seek good outcomes for consumers, dealing with the more complex queries and processes created to remove sludge practices from the consumer experience. This will need careful recruitment at a time when the jobs market is more competitive than ever. On top of that, it’s clear that more companies are dealing with a growing amount of incoming customer contact due to the cost-of-living crisis, and therefore need enough quality staff to handle those effectively.
Overcoming these recruitment problems is where Sigma Connected, as an outsourcer, can provide valuable support and expertise. Businesses can place less complex tasks with us quickly, efficiently and with significant cost savings. This can free up internal resource to target difficult cases if preferred but remembering that we can also manage campaigns right through the entire customer journey. Our offshoring capabilities in South Africa enable us to onboard at a fast rate, delivering competent and capable staff who have experience of looking after UK insurance brands, including time-consuming issues and in particular consumer understanding, which is key to the Duty.
Our experience and skill allow us to onboard new clients in as little as two to four-weeks, saving our clients’ money and making sure that only the best trained agents are trusted to represent you.
Vitally, we become experts in our clients’ business and deliver bespoke training ensuring our agents are highly skilled, prepared and confident when selling, administering and supporting your customers on your specific products, via our omnichannel platform. Our bespoke training programmes are critical in demonstrating your adherence to the Consumer Duty which we at Sigma view as driving a renewed focus on both quality and highly trained people.
The Sigma Connected solution
As I’ve outlined, there is an extensive amount of planning and thinking that those in the insurance sector are doing to prepare for the changes the Consumer Duty will usher in this summer and next year.
You’d expect me to be biased, but it’s clear to me that as more and more businesses in the insurance industry look towards outsourcing, the more it will make sense for them.
Our FCA and industry experience with large clients who have significant compliance structures also puts us in pole position to handle the challenges of the Consumer Duty, especially for smaller insurers who need peace of mind and who don’t have the expertise, large budgets, or resource depth to comfortably cope with areas like quality assurance, audits, policies, that all-important end-to-end customer journey, and not forgetting spikes in consumer contact.
More than anything, the Consumer Duty will drive far more scrutiny and pressure to insurance firms and many other finance-related businesses. But failing to plan and prepare properly will give a host of challenges in the future – with perhaps the biggest one to do things differently to stay one step ahead.