Following on from the implementation of the FCA’s Consumer Duty, it now seems like a good time to reflect on our popular event which focussed on the different stages’ firms are at with regards to embedding the duty. With an insightful keynote from Sheldon Mills from the FCA, followed by a lively debate from our experts in regulatory, culture and customer, the consensus was that despite great work to date, there are still challenges ahead. These challenges were highlighted in a recent FCA report[1]; a review which highlighted areas of good practice but also areas of improvement.
The report is a reminder that the Duty has moved beyond implementation and is very much a reality of day-to-day business operations. However, rather than viewing this with concern, it should be viewed as a reminder of the importance of meeting regulatory expectations and the genuine opportunity for firms to distinguish themselves as having a leading, differentiated, customer-centric culture whilst doing so.
So, how might this be achieved? The report is a useful tool for unravelling this.
Building the right Customer Understanding framework.
Firms must go further to consider customers holistically. Findings from the report show that approaches to achieving good consumer outcomes have been too generalised. For example, the report emphasised that firms had not gone far enough to fully understand the complexity and subsequent provision required to support vulnerable customers. This is a perfect example of how an absence of strong Consumer Duty principles can lead to real, tangible human consequence, which is particularly present in the insurance industry. This is where the holistic, tailored approach becomes a necessity, rather than discretionary.
The report highlighted that many firms have made strong steps to redesign customer journeys but there is some way to go in order to achieve true customer-centricity. As outlined in our previous article,[2] this means wider consideration of customers and their journeys and embedding customer centricity within the DNA of the business. High performers were those that incorporated a range of data points and frameworks such as end-to-end customer journeys, in order to fully understand customer pain points and outcomes. This translates to easier prioritisation, enabling firms to address target gaps in consumer understanding. On the other hand, firms that only consider one data point in their analysis, tend to provide inadequate value assessments for example, which are not truly customer focused.
The report has been a warning for firms and is indicative of the FCA’s commitment to ongoing monitoring of Consumer Duty and a reminder that it is not going away. However, with focus, it can be straightforward to make the required enhancements.
How can KPMG in the UK help insurers?
Distinguishing good practice lies in addressing both customer understanding and evidence. KPMG in the UK are helping insurance firms across the market as they finalise and embed their Consumer Duty programme and identify the significant commercial opportunities that the Duty offers. We are assisting with closing gaps from product assessments, identifying and enhancing key customer journey touchpoints and testing large volumes of customer communications. For example, we have a ready-made solution that can review large volumes of documents, map out customer journeys and pinpoint pain and gain points. For insurers who typically have many lengthy and complex policy documents, this can save time and money and further provide a logical evidence trail for the regulator. Furthermore, the opportunities to apply techniques from behavioural science onto robust customer journey and product lifecycle mapping provides further sustainable growth opportunities in the embedding of the duty. Our solutions are highly credible and should be viewed not just as accelerating compliance, but a key step in moving the firm to an efficient, customer-centric organisation and building foundations for customer-led growth.
For more information, please contact the leads below:
James Henderson
Dave Lennon
Phillip Deeks
Footnotes:
[1] Consumer Duty implementation: good practice and areas for improvement | FCA
[2] Consumer Duty: From 'Duty' to 'Centricity' - KPMG Global
