Consumer Duty – are you measuring the right things?


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The requirement to assess, test, understand and evidence client outcomes under Consumer Duty, on an ongoing basis, hasn’t been given the column inches it needs. Headline writers, rightly so, have been preoccupied with the go-live elements and early implementation. With the passing of two high profile deadlines, the focus has been on companies’ action plans, fair value assessments, and the upfront work that was required to prepare for the go-live dates.

With these deadlines in the rearview mirror, the next wave of reporting told us about firms making significant changes to improve the four outcomes. Let me give you just two examples.

  • Price and value reviews – we’ve seen some very significant impacts from price and value reviews. Investment advice firm St James’s Place dramatically reduced its fee structures, and set aside some £450m to cover potential claims for failing to provide annual reviews to clients who had paid for them.

  • Products and services – in motor finance, significant contingencies for compensation have been made by finance companies (£450m by Lloyds Bank in relation to Blackhorse Finance and the scrapping of the dividend by Close Brothers).

These examples have had a significant short-term impact on share price and market reputations. But, arguably these are firms that have got ahead of the curve by taking Consumer Duty seriously and acting to address the inevitable.

What’s the focus now?

Ask firms where their focus is right now and measuring and evidencing outcomes is at the top of lists. And it’s proving to be one of the most difficult challenges. The reasons are complex. But, there is a common thread running through companies struggling with this.

Most firms’ work to date has been focused on repurposing existing metrics or acting on the enablers of outcomes rather than measuring the actual results experienced by their clients. We’re heading into EFQM Business Excellence Model territory now. The original model provides a good context to consider the task of evidencing good Consumer Duty outcomes. Let me explain.

I first came across the concept of enablers and results in the early 1990s when I was introduced to the European Foundation for Quality Management. The Foundation set up a team of experts, from industry and academia, to develop the EFQM Business Excellence Model, a holistic framework that can be applied to any organisation, regardless of size or sector.

This was first used to support the assessment of organisations in the European Quality Award in 1992.

Business Excellence Model graphic

The model shows organisations the cause and effect between enablers ‘what you do’ and the results ‘what you achieve’. Measuring both the enablers and the results is key to making the model work.

How does this work in the context of Consumer Duty?

Measuring the enablers

Leadership – is Consumer Duty a standing agenda item at all board and leadership team meetings?

People – training, training, training. How are we embedding the Duty into the culture of our organisation? Do we need to rethink our people approach?

Strategy – target market evaluations, product selection and best value assessments.

Partnership resources – distribution chain evaluation and sharing data on outcomes. Is our documentation easy to read and understand?

Processes, products, services – customer journey assessments, reviewing processes from an “outside-in” perspective. How must these improve to ensure good outcomes?

Measuring the results

Most businesses are able to measure the enablers of improved performance. But when it comes to the results – many firms are relying on:

Assumed results – we have a high NPS® therefore we must be delivering good outcomes. Our churn rates are low so we must be delivering good outcomes.

Input activities – training or product reviews, for example.

Assumed satisfaction – low numbers of complaints are conflated with high levels of satisfaction. (I have clients who are told by the FCA they don’t see enough complaints and have to start looking for low-level expressions of dissatisfaction to investigate).

Measuring average outcomes – some firms are relying on measuring ‘average’ outcomes and aren’t measuring the full distribution of outcomes among all customer groups.

Recycled or renamed data – firms are relying on existing management information (MI) / customer experience metrics (not aligned to the four outcomes).

None of the above is anecdotal. These types of mistakes are showing up in FCA progress reviews. There’s a double health warning in this comment from Sheldon Mills, Executive Director, Consumers and Competition, FCA.

“We do not want to see firms waiting to see if we will intervene to address an issue. Firms also need to get serious about their data and not assume they can just re-package existing information.”

What should you be doing?

Be proactive. Monitor and measure outcomes on an ongoing basis and capture the evidence through a managed feedback programme. Why re-invent the wheel at your own cost?

Customer feedback is a critical part of the MI that sits behind your outcomes assessments. Your management team needs to show that they have understood the feedback from customers (and their team) and used it to refine your offering. You then need to measure the results of any interventions. This is continuous. It’s not once-and-done.

Be clear on your KPIs. What do you want to measure – is it CSAT or NPS® for example? Are you asking clients if they understand the products/services you provide, if they perceive good value, if they are getting the support they need, and if the products and services continue to meet their needs?

Are you measuring actual outcomes? Or have the pressures of implementation meant you’ve been focussed on the enablers and are missing the results?

Republished with author’s permission from original post.

Charlie Williams
Charlie is a customer and employee experience expert and Net Promoter Certified Associate. He has been working with organisations since 2006 helping them understand their customer experience and develop programmes that create a customer centric culture, drive advocacy and employee engagement. A specialist in the Financial Services sector, he helps clients to capture evidence of Consumer Duty outcomes.


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