The Financial Conduct Authority has said that its new consumer duty will fundamentally improve how firms serve consumers. It aims to set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first.
Its aim is that consumers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need when they need it.
Among requirements is the need to focus on the real and diverse needs of customers, including those in vulnerable circumstances, at every stage and in each interaction.
Additional non-financial benefits offered alongside protection policies are now commonplace, with a wide range of services offered to policyholders including GP services, fitness apps, discounted gym membership, second medical opinions and access to personal nurses.
The protection industry has long since recognised that protection is about more than just money, non-financial needs can often be overwhelming, and when relevant practical and emotional support is given, it makes a huge difference to customers and their families.
But what is the role of value-added services in providing fair value for all customers?
Customers, of course, have very different needs, circumstances and lifestyles and these obviously change over their lifetime. So, to be effective and offer fair value to all customers, value-added services need to be relevant and of value to them all, not just a small segment.
Customers need to understand what is available to them, and importantly, how to access the support. In such a long-term product this is challenging and, in our experience, customers are often not aware of support available to them.
Those providers who proactively offer support at the point of need really set themselves apart. Customer testimonials we receive such as this one are not unusual: “When I took out insurance, I didn't even know about this service. To say it has been a life saver is beyond words. I always recommend my insurer to friends now.”
The term ‘vulnerable customers’ may be applied to those customers, and potential customers, who have diverse needs, and clearly providers and advisers have a duty to ensure that these needs are catered for in all their interactions.
In the event of serious illness most customers become vulnerable, and even the simplest tasks can be overwhelming. Providers should ask themselves whether their value-added service provision offers support to help those in vulnerable circumstances, and if so, how do they ensure they get the right type of support at their time of need?
Given the diversity of customers and the longevity of protection products, there are some key factors that drive fair value for customers:
- Relevance – is the service, or suite of services, relevant to the customer, are all life stages and abilities catered for? Many value-added services offer support for specific sectors, such as fitness apps catering for those with an interest in keeping fit, or elderly care services. The support offered needs to be appropriate and clear to customers, so they can easily understand how and when the service would be helpful for them.
- Personalisation – does the service offered cater for the personal needs of each customer? Protection customers are very diverse with a wide range of needs in good health and bad. True value is added when the service is tailored to the personal circumstances, needs and preferences of each individual at that specific point in time.
- Families – is support available to family members as well as policyholders? The whole family is usually affected when someone is ill, whether this be the policyholder or not. When support is available for the policyholder and their family, insurers can make a big difference to their customers at an extremely difficult time.