The FCA's Consumer Duty Rules and Guidance took effect on 31st July 2023.
Since the publication of the rules and guidance, we have been reviewing our processes, procedures, governance and controls to ensure that they are aligned with the Consumer Duty Principle, the three cross-cutting rules, the four consumer outcomes and the 6th Conduct Rule ‘act to deliver good outcomes for retail customers’.
Culture underpins who we are as a business and how we work as aTeam. Our actions (or lack of) will ultimately impact the outcomes of our customers.
A positive culture is key to a conducive working environment that allows people to flourish, ultimately benefiting the people that we provide products and services to.
The Consumer Duty, introduced by the FCA is a shift in how we view regulation. The rulebook is still in place and Consumer Duty comes with a set of rules itself, however it is the outcomes that provide the main focus, and a higher expectation is now set for the standard of care that we give customers. The FCA defines culture as “the habitual behaviours and mindsets that characterise a firm” and has identified four drivers of culture:
Purpose – our purpose as a business should be consistent with the Duty. Our employees need to understand how our purpose is relevant to delivering good outcomes for customers. How do we achieve this? Our strategy, mission, vision and values are developed with a focus on good customer outcomes. Communication is also key to this. We pride ourselves on communicating well across the business. We are one team and inclusive in our nature.
Leadership – our leaders must be competent and accountable and should demonstrate commitment to delivering good outcomes to our customers. It is important to us that the leadership team does exactly that and leads by example, to ensure that we can embed good outcomes throughout what we do. The leadership team is visible throughout the business with open communication channels for our team. The Board has responsibility and accountability for ensuring that any identification of poor outcomes for our customers or identification of foreseeable harm are acted upon, along with ensuring the business has the resources (whether that be people, financial or technical) to do this.
People – delivering good outcomes for customers should be reflected in the way in which people are managed and rewarded. Our teams should be trained to be able to deliver good outcomes for customers. Our people are the heart of Platform One. Ensuring that our people have performance and reward structures that are in line with delivering good outcomes is therefore imperative to us being able to achieve this. Our performance and development programme, along with our reward and recognition schemes have been designed with this in mind, requiring the employee to think about how they have influenced good outcomes and ensuring that targets or goals don’t undermine this. Development of our employees is also important to us and features heavily in our performance and development process and our career progression frameworks.
Governance – our controls and key processes should be setup in a way that enables us to identify where we are not delivering good outcomes for our customers. We need to ensure that we have strategies in place to understand and tackle root causes of problems and to mitigate poor out comes from happening.
Without effective governance, systems and controls and oversight we would not be able to provide good outcomes to our customers or identify issues as and when they occur.
We have governance committees in place that all support good consumer duty outcomes along with a robust risk management framework and compliance monitoring programme. All committees report into the Board to ensure that the Board has effective oversight of all issues and actions being tracked.
It is the Board’s overall responsibility to ensure that the Duty has been properly and fully embedded within our business. The results of all consumer duty assessments and monitoring performed, along with management information and metrics is presented to the Board.
The Board has oversight of all identified actions along with their progress through to completion, with responsibility and accountability to ensure that these are effectively prioritised, implemented and resourced to avoid poor outcomes and foreseeable harm to our retail customers.
We have developed a structured product and service design process that focuses on the needs of the intended customers.
The framework details our responsibilities and the steps we go through to design, review and approve a product or service. We review our approval process on at least an annual basis, or when feedback monitoring identifies improvements to be made, to ensure that it is still fit for purpose.
The product/service assessment documents how the product or service will enable and support retail customers to pursue their financial objectives and includes a price and value assessment, a consumer understanding assessment, a consumer support assessment and a vulnerability assessment, along with other elements such as the target market and distribution strategy, the product benefits, features and limitations.
Existing products and services are also reviewed on at least an annual basis, or when there are any changes, against the same criteria. Any actions identified are recorded and tracked through to conclusion.
In addition to the above we conduct ongoing monitoring of the outcomes experienced by our customers by analysing data and information. Some examples of this are as follows:
· Customer Data – to identify target market data and distribution information
· Product / service inflows and outflows
· Customer retention data
· Vulnerability data
· Types of enquiries received in relation to the product or service
· Complaints relating to the product or service
· Breaches / incidents and near misses
· Customer and adviser feedback
Our employees receive training on the products and services that we manufacture and distribute to ensure that these are understood and that the team can provide a high quality level of support to our customers and their advisers with a focus on achieving good outcomes.
When determining or reviewing the price and associated value of a product or service that we manufacture we take a number of considerations into account, such as the following:
· What is the product or service and what is its purpose?
· Who is the target market?
· What is the distribution strategy?
· How does the product or service enable retail customers to pursue their financial objectives?
· What is the nature of the product or service, what benefits will be provided and what are their qualities?
· What are the limitations of the product or service?
· What are the vulnerability considerations?
· Are there fees or charges which appear unjustifiable or unreasonable compared to the benefits of the product and other comparable products (either our own or in the market)?
· What is the expected total price that customers will pay over the lifetime of the relationship?
· What is the cost to manufacture and/or distribute the product or service?
· What are the market rates and charges for comparable products or services and is our product or service a significant outlier to these?
· Do we have other products or services that are priced significantly lower of a similar or better level of benefit?
· Is charging information clearly provided to the customer in good time before making a decision?
· Are product benefits and features clearly provided to the customer in good time before making a decision?
· Should any changes in the benefits of a product or service be reflected in the price?
· Have the costs of servicing the product changed?
· What quality of service do we offer including ongoing support?
By answering the above questions we obtain a full picture of the product or service and how it does or doesn’t meet the needs of customers along with whether it can provide good outcomes and will avoid foreseeable harm. The assessments are reviewed and approved by the ProductGovernance Committee and the Board, with any areas for improvement tracked through to conclusion. The assessment includes a risk rating to identify any immediate areas for remediation.
As a distributor of third-party products we must also receive third-party manufacturers’ assessments of value and consider the value of the product across the distribution chain.
In the event that we identify that a third-party product or service may not be offering good value for the retail customer we will reach out to the third-party manufacturer for more information. Information with regards to third-party product provider assessments of value is presented to the Board and the Product Governance Committee. In the event that there are concerns about a particular product, this is immediately escalated to the Board and the Product Governance Committee to reach a decision about distributing that product on the platform. This may result in the suspension of the product to new business or the withdrawal of the product from the Platform. Any actions taken will also consider whether the action itself could result in a poor outcome for our customers.
Monitoring price and value
To monitor the price and value of the products that we manufacture and the services we deliver, we analyse data in respect of the product and service and take action where identified. This data includes:
· Customer complaints including trends and root cause analysis
· Incident, breach and near miss data
· Customer retention data
· Customer survey data
· Service and operational data (e.g enquiry response times)
· Feedback from other firms in the distribution chain
· Any market conditions that could impact the product or service
· Financial data
Under the Consumer Understanding outcome we must ensure that all communications produced for retail customers are suitable and supportive of understanding and good outcomes. This then enables a retail customer to:
· Make decisions and act on these decisions without facing unreasonable barriers
· Achieve their financial objectives
· Understand the product, services, features and risks of the product
· Understand the implications of any decisions made
· Make informed, effective and timely decisions about the financial products and services we provide
To enable the retail customer to do the above our communications must be:
· Clear, fair and not misleading
· Tailored to the characteristics of the intended audience
· Tailored to according to the complexity of the product
· Tailored toward the communication channel that is to be used
· Relevant, and
· Provided on a timely basis
We have a communication review process in place which is completed for all new communications and existing communications on at least an annual basis, or where changes to communications are made or required.
This process considers a number of elements that are important when communicating with retail customers of differing levels of knowledge, experience and literacy and with vulnerability considered throughout the process.
Each retail customer communication is reviewed and risk rated against a number of assessments. A final rating is then determined along with any resulting action points. The rating also determines the urgency of remediation for any actions identified.
The categories assessed include the following:
· Frequency of the communication
· Availability / Communication Channel/s
· Timing of the communication
· Customer interaction points
· Language used
· Is it clear, fair and not misleading
Testing and feedback
Methods for testing that we consider are as follows:
· Customer Surveys
· Focus groups
· Utilising experts in customer communications and understanding, including behavioural economics expertise
· Utilising online resources / software to identify the literacy requirements in respect of a communication and whether this meets the needs of the customer
Monitoring Consumer Understanding
We monitor the effectiveness of our customer communications through feedback received and data such as complaints data and the number and types of enquiries received. Where identified updates will be made to communications as a result of this monitoring.
In our role as a platform provider and product manufacturer we must ensure that we support our customers and their financial advisers. Customers can only pursue their financial objectives if we support them in using the products and services that they have bought.
We therefore put ourselves in the shoes of our customers and ask ourselves questions such as:
· If I was using our products and services would I find them easy to use?
· Would I understand the products and services that I have signed up for and are paying for?
· If I don’t understand something, do I have a channel to find out more information? Can I speak to someone? How do I do that?
· Do I receive useful information, does it make sense? Do I receive it at the correct time to enable me to make an informed decision?
· What happens if I find myself in a vulnerable situation? Can Platform One support me and help me? Is the team at Platform One trained to identify customers in vulnerable situations or with vulnerable characteristics?
· Do I understand how much I am paying for a product or service and why?
· What do I do if I have a problem or issue? Do I know how to get in touch with someone who can help?
· I no longer have a financial adviser, what does that mean? Can I still access my investments and make investment decisions?
· I need to complain about something, how do I do that?
We think about our own experiences when dealing with firms and what we have struggled with, found frustrating or found to be a positive experience.
How Platform One “supports” the Consumer Support Outcome
Some ways in which we do this are as follows:
· Communication channels – we have a number of communication channels such as messaging via the Platform, telephone, email, post and live chat.
· Our ability to identify customer vulnerabilities through training and ability to support these by being flexible and providing alternative service offerings.
· A dedicated customer support team. We have a team dedicated to customer support who respond to enquiries from financial advisers and customers.
· Escalation processes for responding to non-standard issues.
· Reviewing the customer journey to ensure it meets the needs of the customers.
· Ensuring no barriers to customers for post-sale processes.
· Utilising ticketing and software systems to track enquiries to ensure they are dealt within a timely manner.
· Customer satisfaction surveys.
· A dedicated Consumer Duty internal feedback hub, to identify areas for improvement and to track actions.
· A Consumer Duty Champions Team consisting of first line employees.
· OKRs – Objectives and Key Results! We set team and company-wide OKRs to set standards that we want to achieve. Meetings are held monthly to track the progress of OKRs. The OKRs include delivering excellent customer service and increasing knowledge within the business.
· Our values as a business. Our values are Excellence, Integrity and Innovation. These are critically important to the business and will all result in a good outcome for our customers.
· Our culture - Culture is key. We want to ensure that everyone at Platform One feels empowered to raise an issue when identified and suggest areas for improvement, working together to ensure we can provide that excellent service.
· Governance – We have a strong and robust governance framework in place.
· Training. Ensuring that everyone receives training to understand the business and how we can support good outcomes for our customers.
· Participation in industry forums and working groups enabling us to understand what’s changing, what’s coming up and the impact this could have. This also helps to navigate regulatory change and what this means for our customers and us.
· Appraisal and remuneration structures. Having appraisal and remuneration structures that support good customer outcomes.
· Management Information – we have a suite of information that tells us how we are doing, what areas do we need to focus on? How can we do better?
· Compliance Monitoring. Ongoing monitoring of the business is conducted to identify areas of weakness that may need some remediation or where we are doing well and how we can duplicate that across other areas with success stories.
· Risk Management – identifying areas that may present a higher probability of risk and taking action to mitigate and reduce the probability of a risk materialising.
· Complaints analysis – analysing complaints, trends and root cause and taking action to remediate issues identified.
· Breach, Incident and Near Miss analysis – Identifying breaches, incidents and near miss trends and root cause and taking action to remediate issues.
· Foreseeable harm – within all of the above identifying if we have done all that we can to avoid foreseeable harm to our retail customers.
Monitoring Consumer Support
It is imperative that we monitor how we are doing when providing support to our customers. This enables us to identify and mitigate the risk of consumer harm and ensures that we are meeting our own standards and expectations to deliver excellence. We use management information and internal and external feedback to identify how we are doing and identify areas in which we can improve. Some examples of this are as follows:
· Enquiry response and resolution times across all communication channels.
· Analysis of different categories of enquiries.
· Assessing the quality of responses provided
· Compliance monitoring reviews
· Analysis of complaints, breaches, incidents and near misses for root cause and trend analysis
· Feedback received from our employees, our customers and their advisers
Any resulting findings from the monitoring performed are assigned actions which are recorded and tracked through to conclusion.