Would you sell it to your Parents? A question for the Consumer Duty Champion
Shapes First recently had the opportunity to attend and present at an Association of Foreign Exchange and Payment Companies (AFEP) event on Consumer Duty. We led a session focused on the role of the Consumer Duty Champion which was augmented by Fairer Finance that talked to us all about Consumer Behaviour (thanks Tim Hogg). The event included breakout sessions, where industry practitioners shared their insights and the challenges they were facing with each other as to embedding Consumer Duty good practices in their organisations. The common theme running through these conversations was the need for a consumer-first mindset, epitomised by the question: “Would you sell this product to your mother?” We decided Parents was a more inclusive word. Some of what was discussed is outlined below providing, we hope, practical tips for those working to meet the expectations of Consumer Duty.
Data as the foundation for better consumer outcomes
A prominent theme was data and the insights it generates. Data is not a function of back-office operations — it is the cornerstone of effective, forward-looking Consumer Duty oversight. Rather than relying on isolated data points, firms agreed on the need to adopt more holistic approaches, integrating insights from various data sources to proactively address consumer outcomes.
Consumer feedback, complaints, and product performance are only part of the picture. Firms should combine these with broader data sets, such as insights from social media, online forums, and third-party platforms, to capture consumer sentiment that may otherwise remain hidden. This comprehensive view helps businesses to spot early warning signs, ensuring that issues are addressed long before they result in negative outcomes. An essential part of this holistic approach is identifying and understanding the needs of vulnerable customers. By integrating data from Marketing, Product, and Customer Service teams, firms can ensure their products are properly targeted and designed to meet the needs of their consumers.
A broader, more integrated approach to data, empowers firms to not just meet Consumer Duty obligations but to lead with a proactive, consumer-first mindset, ultimately improving outcomes and building stronger, more trusted relationships with their customers.
Embedding Consumer Duty across the entire organisation
A key takeaway from the discussion was the importance of embedding Consumer Duty throughout the organisation. This isn’t something that should be confined to compliance teams, relegated to a few isolated initiatives, or delegated so far down the organisation that it becomes deemed unimportant. For Consumer Duty to succeed, it needs to permeate every department and every level of the business. Leadership has a key role to play in this, setting the tone for how Consumer Duty aligns with company values and ensuring that everyone is accountable for their part in delivering better outcomes.
The role of training and awareness
Training plays an important role in ensuring that Consumer Duty is understood and applied consistently across an organisation. This is particularly important for employees who are new to financial services, where the regulatory environment and consumer expectations can be significantly different from other sectors. Many firms in the payments sector hire people from outside financial services so comprehensive training that goes beyond basic compliance, helping employees understand how Consumer Duty impacts their specific roles is important. In particular, the Consumer Duty Champion should identify their own training needs.
A key aspect of this training involves building a deep understanding of consumer vulnerability. Employees, especially those in customer-facing roles, must be well-versed in the different ways vulnerability can present itself and how it should influence their interactions with customers. Ensuring that everyone understands their direct and indirect touchpoints with consumers — and how their actions affect the overall customer journey — is crucial to embedding Consumer Duty at every level of the business.
Risk management and accountability: a shared responsibility
Consumer Duty cannot be implemented effectively if accountability rests solely with Compliance teams. Instead, every business function should take ownership of the risks that arise within their areas. This requires staff at all levels to have the confidence and authority to challenge decisions that may result in poor consumer outcomes.
Effective escalation mechanisms are key to addressing potential issues quickly and efficiently. If a flag is raised by customer service or any other team, there needs to be a clear and swift process for determining whether a policy or product needs to be adjusted. Moreover, complaints must be reviewed in the context of the entire customer journey, rather than in isolation, allowing firms to identify and rectify root causes rather than surface-level symptoms.
Fostering a feedback-positive culture
Another key theme that was discussed was the need to move from a blame-focused environment to one where feedback serves as a positive tool for improvement. The phrase "feedback, not failure" encapsulates the idea that firms create an environment where raising concerns or pointing out potential flaws in a product or service is encouraged, rather than penalised. This shift fosters openness, which in turn leads to better consumer outcomes.
This proactive approach is particularly important in product development. Relevant teams need to be provided an environment where they can think through product feature changes or new functionalities and abandon those product ideas that don’t directly serve the best interests of consumers. Asking tough questions early in the development process — like "Would you sell this to your parents?"— ensures that products are not only compliant but also genuinely aligned with the needs of the customer.
Key questions for the Consumer Duty Champion
The following questions were identified as critical for Consumer Duty Champions to consider when evaluating their firm’s alignment with Consumer Duty expectations:
Are we leveraging data effectively to identify and support vulnerable customers?
Does our firm's culture genuinely reflect Consumer Duty principles, starting from the top?
Are all employees equipped with the training needed to understand how their actions affect consumer outcomes?
Do we have a clear and robust process for challenging decisions that could negatively impact consumers?
Have we cultivated a culture where feedback is valued and used to drive continuous improvements?
These questions (amongst others) serve as a practical guide for ensuring Consumer Duty remains central to your firm’s strategy.
If you would like see some other questions or a Consumer Duty Champion Checklist, please send an e-mail to info@shapesfirst.com, and we’ll be happy to get in touch with you.
