ProtectionSep 22 2022

Value-added services will be key in providing fair value

  • Describe the impact of the consumer duty on value-add services offered by providers
  • Explain how providers should treat vulnerable customers
  • Identify when they should be proactive
  • Describe the impact of the consumer duty on value-add services offered by providers
  • Explain how providers should treat vulnerable customers
  • Identify when they should be proactive
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CPD
Approx.30min
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Value-added services will be key in providing fair value
(Mykhailo Polenok/Dreamstime.com)

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.

Value-added services

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?

Even if services are clearly explained at the point of purchase, it is very likely that the customer will not remember many years down the track.

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.”

Vulnerable customers

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.

Very often services address a limited range of needs or have significant exclusions.
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