Businesses are overwhelmingly turning to technology for data and insights to solve the challenge posed by the FCA’s new Consumer Duty, according to new research from Moneyhub, the Open Finance, Open Data and Payments platform, by Opinium.
In its new report FCA Consumer Duty: Business Burden or Golden Opportunity? Key decision makers (CEOs, Chairman and Board Directors) were interviewed about their preparation ahead of Consumer Duty’s first deadline in late October.
While alarmingly there was a significant knowledge gap in many companies; 38% of key decision-makers said they had limited or no knowledge of upcoming consumer rights legislation, with some only being alerted to the legislation by Moneyhub’s research, there were also signs that companies they were putting their plans into motion.
22% of companies had projects underway to meet the 2023 deadline, and another 28% are developing plans to meet.
For many of these companies, technology was the key to preparing for Consumer Duty. 48% of companies plan or are already investing in technology to develop and deliver more personalized and targeted communications. And 41% also plan to invest in technology to access customer information and data.
The new FCA regulations are to ensure that customers receive communications from financial services companies that they understand and are offered products that meet the needs of the individual at the point of sale and throughout the product life cycle, offering a fair value and providing support when they need it. it’s. Importantly, for companies regulated by the FCA, these regulations will eventually affect the companies’ book of business rather than just new business. This in itself will cause a re-evaluation of the products current customers use and whether they are still appropriate.
A deep understanding of your customer is a key challenge for many businesses, without Open Finance providing the data insights based on consent, businesses will struggle to get the information they need to meet their obligations under the Have to. And companies are ready to invest ahead of the July 2023 deadline, with 1 in 4 companies (23%) saying they will invest more than £5m to make the most of the opportunity.
Samantha Seaton, CEO of Moneyhub comments: “There are no excuses left, businesses need to ensure they fully understand their customers so that they can offer products and services that fit their circumstances throughout the duration of their relationship. And the only way this is possible is with a continuous holistic view of your clients’ financial universe. Open Finance truly holds the key for businesses to be Consumer Duty compliant. But seeing the role of Open Finance solely as a solution to a problem is a mistake. It is also an opportunity.
“By understanding your customer better, it means you can offer super relevant and appropriate products and services and ultimately build stronger relationships and build loyalty. Smart, forward-thinking companies will seize this moment and reap the benefits of truly understanding their customers.”