Welcome to the fifth day of our week-long editorial series celebrating the anniversary of Consumer Duty (CD). Yesterday we focused on the overall impact of CD and whether our experts believe it to be a positive step, which you can find here! Each day we’ll continue to explore different facets of how Consumer Duty has reshaped compliance, business practices, and customer outcomes across financial services.
This anniversary marks a significant milestone, reflecting on the strides made by firms to prioritise consumer needs and deliver good outcomes. Our series will cover the necessary changes in compliance, the role of technology in supporting CD, the importance of data and analytics, the impact on customer engagement, and the future outlook for Consumer Duty.
Day 5: How can financial professionals measure the success and effectiveness of consumer duty implementation?
Today we examine how financial professionals can assess the success and effectiveness of Consumer Duty implementation. Key strategies include maintaining consistent measurement methods and being willing to adapt based on results. Success is reflected in how well firms deliver positive customer outcomes and use detailed metrics, such as document clarity and customer feedback. Regular audits and data analysis, including customer satisfaction and complaint rates, are crucial. Long-term effectiveness will be shown through tangible improvements in products and services, increased customer satisfaction, and enhanced loyalty.
Chris Jones, Chief Product Officer at Dynamic Planner said: “The key thing is to review what you do and be willing to change it if it isn’t effective, if you don’t then why measure it at all? It is important to have a consistent measure so that any change is down to you and not a change in the measure itself. The duty sets out broadly what should be measured, and you can compare against your own measures previously and also other professionals like you. We have a lot of data available to our clients on what their advisers and clients are doing in Dynamic Planner and how that compares to the average. Whenever we discuss any noticeable differences there is always a specific reason for that adviser or firm so whilst it’s helpful to compare yourself with your peers that is only an indicator of what areas you need to review in your business. Intending to implement consumer duty, measuring and reviewing and then being willing to make changes if necessary is more important than whether your measures are going up all the time.”
Legal & General’s retail division shares the following comments: “The success and effectiveness of Consumer Duty implementation will be clearly evident in how firms act to consistently deliver good customer outcomes.
What’s particularly positive about the Consumer Duty is that it encourages a very virtuous circle of behaviours. Firms act to visibly and usefully deliver good customer outcomes. That has obvious practical benefits for them, which in turn hopefully increase both trust and engagement. Firms can build on that trust and engagement to better serve their customers, while also strengthening their commercial relationships with them. And all of that is measurable.
For a specific example, there’s our work on measuring both the readability and – critically – the comprehensibility of our customer documents. We’ve mentioned some of the basic tools we draw on while creating them, but we’ve also done a lot of sophisticated, in-depth research.
We look to understand how much readers want to engage with the material, their perceived understanding of and messages received from it, and then how they would respond to it. Key metrics include layout evaluation, use of jargon or technical language, tone and length, and clarity of both writing and any figures used.
And all that’s not just about making the comms more ‘enjoyable’ for the reader. It’s about making sure that we’re avoiding foreseeable harm by communicating key points effectively.”
Sebastien Petsas, Managing Director of Financial Services Compliance and Regulation at Kroll said:“To gauge the success of the Consumer Duty implementation, companies need to be proactive in ensuring their strategies are effective. Regular auditing and compliance checks are crucial to this, ensuring adherence to Consumer Duty regulations and helping to identify areas where firms may be at risk of falling short.
Data will play a key role here, with insights such as customer satisfaction scores, complaint volumes and customer feedback offering a balanced view of the firm’s effectiveness. By keeping a close eye on performance and monitoring the customers’ response, firms can stay on top of compliance with CD requirements, improving their processes at the same time.”
Michael Shand, Managing Principal at Capco said: “Success of the Consumer Duty will be measured over time, as the FCA has stated it is not a “once and done” initiative. A key measure of effectiveness will be the stories and examples that financial professionals collect, demonstrating improvements to products or services that have benefited customers. These may include simpler fee structures, tailored support for vulnerable customers, or new products that better meet client needs. Firms have already started gathering these examples as part of their annual Consumer Duty board reports, and over time, these stories will highlight the success of the Consumer Duty.
When assessing the success and effectiveness of Consumer Duty implementation, immediate large-scale improvements may not be visible. Key points of reference will be measures of customer outcomes, such as improved customer satisfaction and higher outcomes testing results. Longer-term impacts will be seen through increased customer loyalty, higher referral rates, and growth. To measure success at this point, firms should review the changes made over the past two years, using this as evidence of how much has been done with a customer lens at the forefront.”
What’s the consensus?
Measuring the success and effectiveness of Consumer Duty implementation requires a comprehensive approach involving continuous evaluation and adaptation. Essential to this process is the regular review of practices and a willingness to adjust strategies if they prove ineffective. Firms must maintain consistent measures to ensure that any changes in performance are attributed to their actions rather than fluctuations in the measurement criteria itself. Comparing current practices against historical data and industry benchmarks can provide valuable insights, though it is crucial to understand that these comparisons should only serve as indicators of potential areas for improvement.
Success in implementing Consumer Duty is reflected in a firm’s ability to consistently deliver positive customer outcomes, which can be assessed through metrics such as customer satisfaction scores, complaint volumes, and feedback. Effective communication with customers, including clear and understandable documentation, also plays a significant role. Long-term success is marked by visible improvements in products and services, increased customer trust, and enhanced engagement. Gathering and analysing real-world examples of beneficial changes, such as simplified fee structures or better support for vulnerable customers, will help firms demonstrate their commitment to Consumer Duty and ensure ongoing progress.
