By Tom Murray, Head of Product Strategy for LifePlus Solutions at Majesco.
Although the final rules will not be out until July, there is much that is known already and it is easy for firms to make a good assessment of their ability to make the changes that will be required to meet these rules when they come into force. It’s already clear that firms will have to be in a position to prove that they are meeting these requirements and that the ability to monitor their processes and the outcomes they are delivering will be key to being able to provide that evidence.
For example, the FCA will want firms to be in a position to provide evidence that they are taking reasonable steps to ensure good outcomes for the customer. This means being in a position to show that the firm has the management information to monitor its conduct in its interactions with the consumer and to be able to provide a high level of transparency in its advice process. In order to do this, a strong digital trail will be of the utmost importance as well as the ability to analyse the large amounts of data that will result from this to see where changes in their advice processes may be needed.
This is an ongoing process and will therefore be an area that could well benefit from AI / machine learning systems, as these systems can rapidly assess both the compliance level of the firms staff and the relationship between the advice given and the subsequent outcomes achieved for the customers.
Digital platforms are also a useful tool in enabling the presentation of information to clients in a graphical and user-friendly manner; financial concepts can often be difficult to grasp and interactive tools provided to the consumer can help them to increase their knowledge and understanding about the company’s offering and how best to achieve the outcomes that their particular financial position requires.
By using digital platforms to deliver services to the customers, the audit trail of information is always available and easily maintained, ensuring the company can meet its obligations to the consumer and prove to the regulator that it is doing so. It can also help the company to validate its own approach, ensuring that problems that are emerging can be caught early and action taken before any material damage is done/
Although most, if not all firms claim to be customer-centric, the truth is that many processes are designed with the background of how the company traditionally does things. To be truly customer centric means embracing an approach of constant assessment of the customers needs based on feedback from the consumer and adapting processes and products accordingly. However, it is not a one-off process and firms need to be in a position to keep this assessment going constantly. Customer centricity is always going to be a journey, not a destination.
The shift to a digital platform that enables services to be provided to customers and adapted regularly based on feedback and analysis is going to make compliance with this new regulation a lot more achievable. Without having the final details of the rules, companies should already be assessing their capability to improve their corporate culture to being one that truly puts the customer first. They can also assess the strength of their digital capabilities, as these will be key to empowering their staff to deliver the products and services that deliver for the customer and to enable management to monitor compliance of both the staff and the processes to achieve this goal. Without a digital approach to compliance, the new Customer Duty could become difficult to achieve and impossible to evidence. Now is the time to start the journey.
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