It has been a busy 12 months, following the initial implementation of the consumer duty, with significant activity within the industry as firms have made changes to products, increased communication and focused on delivering value to clients throughout the distribution chain.
Across the board, firms have focused on their price and value outcomes and ensuring clients understand their product and services, but there are still opportunities for firms to operate more efficiently in delivering the best outcomes for their customers.
There are many positives for clients following increased information sharing but there is still more to be done to ensure greater collaboration amongst all parties involved in the process. Platform providers, asset managers and advice firms need to work together efficiently to provide a seamless experience throughout their interactions with clients, to ensure the best overall outcome for every client.
Clients have greatly benefited from the industry embracing the ‘value’ element, with firms now clearly demonstrating the value they gain from their services, and we are now seeing greater emphasis on client understanding, perhaps the most subjective of the four main outcomes. Many firms, IBOSS included, have been gathering extensive feedback on what clients actually understand and have worked on redesigning brochures to include more client friendly explanations, testing new ideas with end clients before implementation, and embracing new technologies to enhance and monitor client understanding and provide better support.
IBOSS continues to focus on ensuring that all of our documentation is jargon-free, aiming to ensure good consumer understanding outcomes for all customers, whilst also supporting advisers in meeting their obligations under the duty. All client-facing documentation is reviewed prior to being published, and we regularly review feedback from advisers, clients, independent third parties, and our internal compliance team.
As part of the white-labelled mailing service, provided free of charge for our MPS and OEIC customers, we monitor client feedback on behalf of the adviser and review this every quarter to ensure that our communications continue to meet expectations. On average, over 80% of clients engage directly with the update, and 1.64% respond with queries or feedback which we forward to the adviser on their behalf and review for potential improvement requirements. 99% of the feedback is positive or includes administrative queries to be passed on to the adviser: the provided chart illustrates the content of these responses over the last 3 quarters.
The service also provides a point of contact between the adviser and their clients, prompting the client to reply should they have any queries or concerns, assisting advisers in proactively providing customer support and regular communication. We will continue to develop the service and our monitoring procedures as we move into the second year of consumer duty. Firms generally will now have had the opportunity to reflect on the work already done in year one and will be looking for opportunities to adapt or improve the strategies they have already implemented, either with new solutions or more efficiency within existing processes.
AI has been another key focus within the industry over the last 12 months and will surely support these improvements in the efficiency of delivering the four key consumer duty outcomes. With the ability to streamline repeatable processes, analyse pricing strategies and introduce proactive customer support tools, AI could enhance the way in which value, consumer understanding and good outcomes can be monitored, if used appropriately.
However, it will be crucial to ensure new AI tools are deployed correctly, with appropriate oversight and governance. Firms must understand AI’s limitations and review the quality of data, implementing robust procedures to monitor results, assess for bias, and ensure client data is fully protected.
For more information about the IBOSS approach to Consumer Duty visit our Consumer Duty hub by clicking here.
