As the deadline for consumer duty implementation draws closer, the chief executive of Moneyhub Enterprise has said she suspects many firms have underestimated the changes that it will bring.
Speaking last week at a consumer duty webinar held by Open Banking Excellence, Samantha Seaton outlined why she believes consumer duty will be significant and transformative for consumers.
In Seaton’s view, the biggest change the regulation will bring will be around ensuring ongoing suitability for consumers.
“I think consumers will definitely see a difference. There are some firms out there who are very good, but I think what we have underestimated is the level of care that we’re going to need to give consumers," she said.
“My suspicion is even the best of us out there in the industry have not anticipated the level of intervention the FCA is expecting," Seaton added.
Seaton gave the example of a customer who is “slightly off-target” in terms of their retirement goals and asked whether financial advisers will give such a client an intervention.
”I don’t think we’re in the mode of proactive interventions and I think that’s the thing we will see in a few years time where we will all look back and realise the level of communication we get is in a different league," she said.
Firms are expected to have implemented the consumer duty by July 31 this year.
Research from Panacea published last month revealed that almost all (91.7 per cent) advisers said the Financial Conduct Authority’s consumer duty will increase the cost of running their businesses.
Only a quarter of respondents (25 per cent) said they were fully compliant with the duty as of yet.
Obligations
In Seaton’s view, the thing that most providers will really need to look out for is financial harm.
“You have all of these customers, and we know that people have between five and nine financial products in their lives at any one time," she said.
Seaton gave the example of a bank charging £15 a month for a consumer to use a current account that no longer serves their needs.
“If you’re only down by £10 or £15 a month on a few of these products, times that by 52mn people - that’s a huge amount of financial harm going on that we now have to stop," she said.
Seaton was joined on the panel by Salesforce's senior director, Aman Virk, Accenture's non-financial risk specialist, Anne Godbold and the FCA's manager payments policy, Helene Oger-Zaher. The session was moderated by FTAdviser editor Simoney Kyriakou.
Open banking and using data
Oger-Zaher linked the consumer duty with open banking, saying that when we think about what open banking is and the innovations that have come through “a lot of it is very aligned with what consumer duty is trying to do”.
She also stressed that getting the consumer duty right will help firms deepen trust with customers.
