[Webinar Summary] How has the financial services industry responded to Consumer Duty

Introduction

During extensive consultation with clients over the last couple of years connected to consumer duty, it became clear that a firm’s assessment of how well they were doing when it came to consumer duty was principally driven by an internal assessment of what they were doing and how this aligned to the core principles of consumer duty. This led to a mixed response from clients with some believing that they were already doing everything that they needed to be doing and others feeling more worried about the new standards that had been set. It is against this context that we concluded that there was a lack of consumer feedback in terms of how well firms were doing when it came to consumer duty and that this gap was something that YouGov was very well positioned to fill.

Having piloted our Consumer Duty Index in 2023, we have refined our approach and launched our quarterly Consumer Duty Index in July 2024, one year on from the official launch of the new guidelines from the FCA.

The Consumer Duty Index delivers a robust and reliable assessment of how well the industry is performing when it comes to the core principles set out by these new regulations.

With a nationally representative sample of over 8,000 UK consumers, we have been able to deliver a Consumer Duty Index score for the financial services industry as a whole, 9 underlying markets and 43 financial services brands.

Summary of main findings

So what have we learned from the Consumer Duty Index so far?

• There are signs that the industry has responded positively since the launch of Consumer Duty: A 2-point increase in consumer duty scores at an industry level from 2023 is principally driven by improved scores amongst UK savers.
• The cost-of-living crisis has been an opportunity for some sectors and a challenge for others: Whilst the savings sector may have benefitted from increasing interest rates and stronger perceptions of value, higher costs and the FCA’s new pricing policy have made general insurance clients feel that their products are less affordable and perhaps not worth paying for.
• Certain brands stand out for Consumer Duty, and each have their own unique strengths: Monzo tops our Consumer Duty ranking in July 2024 standing out for acting in customers best interests, Marcus comes second with strong perception of value for money and first direct continues to be highly regarded for customer service and communication.
• There are key focus areas for the financial services industry going forwards: The industry needs to focus on acting in the best interests of customers, delivering value for money, providing great customer service and helping customers to make the right decisions about their money. A focus on these areas will improve customer experience and drive brand advocacy

Q&A

Q: How can I get access to the Consumer Duty Index webinar slides and results

A: Please contact us directly via the 'Get in touch' links on this page and one of our team will respond to discuss how best to access the results and webinar content.

Q: When you talk about savings, does that cover savings & investments i.e. wealth/asset management?

A: No, our savings benchmark is based on cash savings only. Wo do have a separate investments benchmark which includes customers who hold stocks & shares ISA’s or any other investment-based product.

Q: Fascinating to see, thank you. Are you forecasting mass remediation on the back of firms implementing better MI, conducting closed product fair value assessments and reviewing key strategies? Do you feel that this could have a large impact on 2025 CDI scores? Especially the "brand acts in my best interests" score.

A: I think that this is a key challenge for firms in response to these regulations. It is easy for us to get bogged down in these sorts of activities losing sight of the end consumer and why these regulations have come in, in the first place. We have already experienced this with some of the initial consultancy around consumer duty where firms appear very busy responding to the new regulations but are perhaps lacking real customer insight to help inform where they should be focusing and prioritising their efforts. This is why we have launched the Consumer Duty Index, to ensure that the voice of the end consumer is in the room and considered in the way that we respond to these new regulations.

Q: How would you recommend testing communications in line with Consumer Duty if a company if a company has hundreds/thousands of different comms?

A: We already support many of our clients with comms testing via our Consumer Duty Comms testing framework which we created and launched at the start of 2023. During the initial consultation with our clients, it soon became apparent that the volume of comms that needed to be tested was a challenge. In response to this we have produced a comms testing framework that brings the cost per test down as low as possible whilst still delivering robust and reliable results. We also found that most clients have opted to test a sample of their communications initially to develop a clear assessment of their comms across different products focusing on the higher risk communications first. The findings from this initial assessment are then considered and used to internally assess all other communications ensuring that best practice is adopted and rolled out. Some of our clients have also set up the ability to test communications internally but use the learnings from our more in-depth tests to inform the criteria that they set for internal testing. In summary, we do not believe that you need to test every communication to get an understanding of what good looks like but need to test a meaningful sample to have the confidence that you are on the right track.

Q: How do/can we see this each quarter and/or look into surveying about other brands that were low base?

A: We have standard costs for direct access to the benchmark each quarter ranging from data only access to sector specific reporting and debriefs focusing on your brand where there is sufficient sample to do so. Where we do not have sufficient sample from the 8,000 interviews that we are running quarterly, we can look at targeting customers who hold specific products with specific brands from our wider panel. We are able to target a wide range of products and brands through our pre-profiled panel in the UK and we would invite you to get in touch if you are interested in finding out what samples we could potentially deliver for your brand and associated products. Whilst additional costs will apply to deliver targeted sample in this way, you maintain direct access to a very robust and representative sector benchmark from which you can evaluate your own performance. If you are interested in finding our more please contact us directly via the 'Get in touch' links on this page so we can capture your contact details and then respond to you directly.

Q: Is there the opportunity to add additional sectors/brands to the survey?

A: See above.

Q: Are you able to shed any light on the additional cost burden that Consumer Duty has imposed on Financial Advice Firms?

A: There is no doubt that responding to consumer duty requires an investment from financial services companies, but our research has shown how this investment can lead to greater customer advocacy which will drive loyalty, increased share of wallet and greater market share. The challenge is whether this investment is done strategically in the areas that really matter to consumers and will improve their overall experience. Our Consumer Duty Index helps to identify where this investment will be most effective based on how consumers are currently feeling and what is and is not working for your brand.

Q: Apologies if I missed it but how do you account for 6 points consumer duty brand between Bank of Scotland v Lloyds and NatWest v RBS when the products and sales processes will be substantially the same? It looks like overall brand advocacy/NPS is driving the customer perception of consumer duty performance?

A: I cannot comment on the extent to which the products and services provided by these brands will be essentially the same but if that is the case and we are seeing a meaningful difference in Consumer Duty Index scores, then we would be left to conclude that the difference is being driven by other factors which could be brand related. That said, this positive or negative brand perception has inevitably been created by past experience and although the products and services may be more aligned today, they may not have been previously. This represents a greater challenge for brands who have more negative brand baggage such as RBS and an opportunity for brands who maintain stronger brand equity such as Bank of Scotland. Our connected data can help us to measure brand equity alongside Consumer Duty Index to consider this when assessing a brands performance. We have previously done some work on RBS in Scotland and whilst much of the negative sentiment towards the brand was being driven by the brands response to the financial crisis in 2008, many comments also referenced poor service experience suggesting that this is not all about negative brand perception but also an inferior level of service. We work with our clients forensically to determine exactly what is going on with their brand and what key factors account for their performance.

Matt Palframan, Director of Financial Services Research - YouGov

Matt has over 20 years’ experience in the financial services industry, having worked both agency and client side. Having held a variety of roles, Matt has maintained a passion for consumer research ensuring that strategic business decisions are centred around and driven by robust, reliable, and actionable insight.

In Matt’s current role, he is responsible for using YouGov’s full suite of innovative data products and services to ensure that his clients get the most out of what YouGov has to offer as well as providing an experienced and insightful view of key industry trends and topics.

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