Francisco Mainez, Financial Crime and Regulatory Transformation SME at Lucinity writes an article for the Payments Association on the new Consumer Duty rules published by the UK's Financial Conduct Authority (FCA), and its impact on financial products and services. In this article, Francisco explains how technology can assist payments companies in preparing for and complying with new rules that will take effect in July.
The FCA released guidance on the Consumer Duty rules in July 2022, which will go into effect on July 31, 2023 for financial products and services. Firms are expected to have completed their review of existing products by April 20, 2023.
The Consumer Duty aims to ensure that good outcomes for consumers are applied consistently throughout the industry and provide a higher and more uniform standard of consumer protection. The FCA intends for the Consumer Duty to encourage firms to gather data on customer behavior and results. The question for businesses is what data should be gathered and how. Despite numerous efforts to improve consumer outcomes, the FCA has discovered failings within firms. These failures range from deceptive information to poor customer support and products that do not provide fair value to customers.
The new rules and technology can assist companies in collecting the necessary data to comply with the Consumer Duty. Advanced analytics solutions can assist in detecting customer motivations for purchasing products, as well as identifying groups of customers who are not receiving desirable outcomes, allowing for adequate measures to remain compliant. Staff members must also understand customer needs and experiences, as training programs must be created and implemented.
The Consumer Duty represents an excellent opportunity for firms to embrace new technology and undertake a culture shift. At the end of the day, when we leave our workplace, we become the same payment services users the rules aims to protect.
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