The Financial Conduct Authority's (FCA) new Consumer Duty comes into effect in July 2023. This initiative sets higher and clearer standards of consumer protection across the financial services sector, prioritising the needs of customers.
The Consumer Duty comprises a set of overarching principles and rules that financial services companies are obligated to follow. The primary focus is on "putting their customers' needs first." To ensure adherence to this duty, three cross-cutting rules have been established:
- Act in good faith towards retail customers.
- Avoid causing foreseeable harm to retail customers.
- Enable and support retail customers to pursue their financial objectives.
To guide firms in evaluating their impact on consumers, the Consumer Duty outlines four key outcomes that should be considered:
- Price and value: Assessing the fairness of pricing and the value delivered.
- Consumer understanding: Ensuring clarity and comprehension of products and services.
- Products and services: Evaluating the suitability and appropriateness of offerings.
- Consumer support: Providing adequate assistance and support to customers.
Why has the Consumer Duty been introduced?
The FCA has expressed concerns about certain firms presenting information in ways that hinder customers from making timely and informed decisions. Additionally, there have been instances of selling products and services unsuitable for customers and providing inadequate customer support. In the current economic climate, it is crucial to empower customers to make sound financial decisions that yield positive outcomes for them. The Consumer Duty aims to enhance consumer protection and foster a more consumer-focused competitive market that encourages firms to compete and innovate in pursuit of good outcomes.
Who is affected?
The Consumer Duty has a wide-reaching scope, encompassing all firms with a material influence on retail customer outcomes. Notably, the FCA has expanded its definition of "retail clients" to include small and medium-sized enterprises (SMEs), in addition to individual customers and small commercial customers. An SME is defined as an organization with fewer than 250 employees, a turnover of less than €50 million, or a balance sheet total less than €43 million.
How is MS Amlin preparing for the Consumer Duty?
At MS Amlin, we have diligently worked towards meeting these higher standards for some time. To ensure a comprehensive understanding of the regulatory expectations of the Consumer Duty and its implications for our business, we have undertaken an extensive program of work. This program covers various aspects, including product and service design, distribution management, and the overall customer experience when engaging with us.
Through this effort, we have identified areas where improvements can be made to consistently deliver good outcomes for our customers. As the implementation deadline approaches, our focus shifts to embedding these improvements and establishing a reporting framework that enables us to monitor the achievement of good outcomes on a regular basis.
How is MS Amlin complying with the Consumer Duty outcomes?
Products and services:
We thoroughly evaluate our products and their target markets, considering any features or limitations that may render them unsuitable for specific customer groups.
Price and value:
We conduct fair value assessments, taking into account factors such as the nature of the product, its coverage, additional benefits, limitations, and customer feedback. By analysing historical and projected claims costs, economic and climatic trends, distribution costs, and other factors, we determine whether the price paid by customers for our products and services is fair. If any concerns arise from these assessments, appropriate action is taken, which may include temporarily withdrawing a product from the market.
Our product governance framework ensures that our product wordings provide clear and comprehensive coverage. Additionally, we have processes in place to review and approve financial promotions, guaranteeing that they are fair, clear, and not misleading to their intended audience. As part of the Consumer Duty program, we are also reviewing our customer communications to ensure accessibility, clarity, and timely provision, enabling effective choices to pursue customers' financial objectives. If necessary, we will update our communications to support the delivery of good outcomes for our customers.
We have thoroughly examined the customer journeys our customers experience when engaging with our products and services. This analysis helps us identify key touchpoints and determine how we can best support our customers, whether directly or through intermediaries or third parties. Areas for improvement are addressed to ensure appropriate levels of support across our offerings. Regular monitoring, including feedback and complaint analysis, ensures the provision of satisfactory customer support. When operating through intermediaries or third parties, we clearly communicate and monitor our expected service standards.
What is MS Amlin’s framework for providing support to vulnerable customers?
MS Amlin's framework for supporting vulnerable customers is focused on continuous assistance throughout the customer journey, starting from the point of sale and extending throughout their policy. It is crucial for us to identify any specific support or reasonable adjustments needed by the customer and promptly address those requirements. This approach allows us to deliver a seamless and customer-centric experience.
To ensure we effectively address the needs of vulnerable customers, we adhere to the guidance provided by the Financial Conduct Authority (FCA). Our goals are:
- Clear and understandable products: We strive to make our products easy to comprehend, ensuring that vulnerable customers can fully grasp their features and benefits.
- Inclusive communication: We offer flexible communication methods to cater to the diverse needs of all customers, ensuring that our messages reach and resonate with everyone.
- Collaborative partnerships: We work closely with vendors and suppliers who share our commitment to supporting customers with vulnerabilities, maintaining high standards across the board.
- Employee training and support: We provide comprehensive training and ongoing support to our employees to enhance their awareness and understanding of customer vulnerability, enabling them to provide the necessary assistance.
By implementing this framework, we aim to create an environment where vulnerable customers receive the support and care they deserve.
Where can you find more information about MS Amlin's Consumer Duty implementation?
For any questions or communications regarding MS Amlin's Consumer Duty implementation, your normal contact at MS Amlin can help.
Additionally, you can find more resources on the FCA website, where you'll discover articles and podcasts that explain what the Consumer Duty means for you as a consumer or firm: FCA Consumer Duty website link
We are committed to upholding the highest standards of consumer protection and ensuring that our customers' needs are at the forefront of our operations. The implementation of the Consumer Duty aligns with our values and our dedication to delivering good outcomes for all our valued customers.