Consumer duty: FCA provides clarity on support outcome

The consumer support outcome aims for firms to provide a level of support that meets the needs of consumers throughout their relationship with a firm.

Speaking to Ozge Ibrahim on the Inside FCA podcast, Sean Cafferky, a member of the regulator’s policy team said that this essentially means that the regulator wants to see “consumers get the support they need, when they need it”.

“I’m sure everyone’s experienced poor customer service at one point or another,” Cafferky said.

“For some it’s an inconvenience but for others, particularly consumers who need more help, battling through poor support can be really time consuming and a significant source of stress. And more than that, it can cause real harm where it means consumers can’t properly use their products.”

Cafferky said what the FCA wants to see is firms provide the support that enables consumers to use and enjoy the full benefits of the products and services they buy.

Positive friction might include things like risk callings or additional steps designed to prevent fraud

He noted that this has never been more important given the cost of living pressures consumers are currently facing and gave the example that the support offered by firms may include allowing them to act in their interest by switching products, moving to a new provider or making a complaint.

The FCA wants to see more consistent and high level consumer support offered across retail and financial services, but Cafferky noted that it recognises that firms differ in areas like size, product offering and consumer base. 

As a result of this, the FCA has included what it refers to as rules of thumb in its guidance so firms can get a sense of what the regulator is looking for in real terms.

“For example, products shouldn’t cost more than consumers expected up front. So, that means no unreasonable exit fees, charges or other costs like delays, distress or inconvenience without good reason,” Cafferky said.

“Also, after sale support should be as good as pre-sale support, so consumers shouldn’t find it as easy to switch, leave or make a change as it was to buy the products in the first place,” he added.

In terms of how a firm provides support, the FCA has not prescribed which channels of support firms must offer and does not expect that support will always be provided via each individual customer’s preferred channel.

Cafferky explained the key thing the FCA wants to see is support that deals effectively with non-standard issues and customers who find themselves in vulnerable situations.

This means that firms will usually need to be able to provide at least some support through different channels or by adapting their standard approach.

“For example, if somebody suspects that they’ve been a victim of fraud, I think the natural reaction of many in that moment of just panic and vulnerability is they’ll want to speak to someone in real time for that reassurance that it’s been dealt with,” Cafferky said.

He noted that firms should clearly communicate what support they offer up front, so that customers can properly understand what they are signing up for. 

Cafferky added that because consumers’ needs can change, the FCA expects that where a more limited support offering no longer works for a consumer, they can be supported “including in exiting where appropriate”.

“One of the key ways firms can check they’re getting it right in this area is through their monitoring, so looking at how customers are behaving, how they’re using their products, what they’re complaining about and other feedback,” Cafferky said.

Vulnerability and ‘sludge design’

According to Cafferky, flexibility of response will be key to how a firm meets the needs of customers with characteristics of vulnerability.

This means adjusting standard processes where necessary and may include things like offering access to sign language interpreters, providing communications in a different format or “just spending a bit longer with customers to make them feel genuinely understood and supported”.

Cafferky directed firms to the consumer duty guidance for further examples of what this can look like in practice.

In terms of the customer journey, the consumer duty has called out ‘sludge design practices’. 

Cafferky elaborated on this and said it relates to friction experienced by the consumer.

“We think there’s good and there’s bad, and there’s obligations on firms to both include appropriate friction in customer journeys but also ensure customers don’t face unreasonable barriers or sludge when they want to act in their interests, for instance by making a claim, complaint or switching to a better product or a different provider,” he said, 

“In the right places we know friction can act as a valuable safeguard against harm, so appropriate or positive friction might include things like risk callings or additional steps designed to prevent fraud or make sure customers are aware of the consequences of cancelling a contract.”

However the other side of this friction is ‘sludge’, where firms include friction in their customer journeys that discourage customers from doing things they might prefer they did not do - for example, switch providers.

“Another example could be designing a long-winded complaints process with lots of extra steps to put customers off. Obviously, we don’t want to see these types of sludge practices,” Cafferky said.

He noted that firms may be asking themselves where is the line on this and said the FCA expects firms to review their customer journeys and look out for frictions along the way and consider the impact.

“It’s the outcome here that really matters, so again firms monitoring will be important in helping them understand how customers behave and respond to different journeys and whether they’re driving the right outcomes,” Cafferky said.

Long call wait times

When asked whether the consumer support outcome will address the issue of long call waiting times, Cafferky said the regulator has not set “rigid set rigid standards for how long a customer should wait to talk to an agent, how long a call should last or how long an issue should take to be resolved".

“What’s reasonable will depend on the circumstances,” Cafferky said.

“For example, there are times where a firm’s call centre may experience unforeseeable demand such as at the start of the Covid pandemic. And there’s other variables as well, including the complexity of the issue in question. And that means that some delay or inconvenience might not be unreasonable.”

However, he noted that if customers simply cannot get through to a provider or if they meet unreasonable delays then that will not meet the new standards.

“This all means that we do expect to see average waiting times to come down. And we also expect firms to be able to demonstrate with data they’re providing appropriate support, whether that’s complaints, average waiting times, customer satisfaction and so on,” Cafferky explained.

He added that the FCA will also be looking at the relative wait time consumers are faced with and that they are not waiting disproportionately long in some instances.

jane.matthews@ft.com