Duty demands that they collect and interpret more customer data and use it to make more automatic recommendations. It is inevitable that, as they do that work, the adviser-consumer relationship is going to feel increasingly disrupted or threatened.
One clear parallel is in the automotive world, although this market is not as affected by consumer duty.
As that market digitised, and car manufacturers were able to gain access to telematics and other car history and usage data direct (from the car’s computers), it has become possible to put all this data to work to provide maintenance checks and tailor offers directly to the customer, potentially disintermediating dealerships and leading to many more new vehicles being bought direct from the manufacturer.
This is being enabled by increasingly sophisticated and highly visual online car configurators, for example. Will advisers also feel increasingly disintermediated as providers learn to manage and monetise all this new customer data they must now gather and harness?
Outcome 2 – Products and Services: Firms should be offering customers products that meet their needs, rather than pushing products that are not suitable or unneeded.
Payment protection insurance was a historic example of where the industry got it wrong for customers.
However, the FCA notes that some consumers are still being pushed into high-risk investments, unaffordable high-cost credit and unsuitable debt products that do not meet their needs.
Once providers knows more about their customers and have perhaps determined that a segment of their customer base is now holding too much in a product that is sub-optimal for them, consumer duty encourages the provider to offer that group a more suitable product.
A provider or platform might want to create an automatic, low or no-cost switching service to put this group in a better place for their needs.
Much like an automatic portfolio-rebalancing service, which might be offered by investment platforms, it must require the minimum of intervention by the customer, save their expressed approval to go ahead.
Again, these interventions by the provider or platform might cut across changes that a customer’s IFA is about to recommend at the same customer’s next quarterly review session.
Perhaps the IFA is about to advocate that monies are transferred away from that particular provider.
Again, there is clear scope for customer confusion and IFA-provider conflict.
Outcome 3 – Consumer Support: When it comes to customer services, many of us have experienced long call-waiting times to speak to our insurers, and reduced access to in-person services at our high-street bank branches.
There has been much talk about the FCA wanting to stamp out ‘sludge practices’ that slow down the progress of insurance claim settlements for example – acting against the interests of customers.
