Celebrating the benevolent revolution in financial services marketing

The new Consumer Duty: Celebrating a benevolent revolution in financial services marketing

Not many people in the UK realise it, but a quiet and benevolent revolution is taking place in the financial services (FS) sector. Sales and marketing teams in particular are key players in this and are using their unique skills and experience to ensure that the industry looks after consumers to the best of its ability.

The major financial services regulator, the Financial Conduct Authority (FCA) has published a key new regulatory standard, simply named the Consumer Duty.

This introduces an overarching principle, that “A firm must act to deliver good outcomes for retail clients” as well as cross-cutting rules, and a laying out of what good consumer outcomes look like, under the headings “Products and Services”, “Price and Value”, “Consumer Understanding”, and “Consumer Support”. These outcomes can be seen in products that are well designed to meet consumers’ needs, a truly fair and considered approach to providing value, clear customer communications, and sufficient consumer support.

Consider those areas: whilst they’re not exclusively the preserve of marketers, they certainly overlap to a sizeable degree. To ensure that products and services are well-designed to meet target segment needs, for example, product development lifecycles need to be carefully managed and governed. Firms need to be able to demonstrate that they understand those segment needs, so their market research has to be solid and remain current. Communications and support should meet the “information needs” of the target consumer (the regulator’s own words), so empathy and creativity need to be dialled up further to ensure messages are truly delivered and understood.

In product creation and communication financial services salespeople and marketers have always faced challenges that many sectors don’t. Products and services can be complex, backed by smart design to ensure their efficacy. Communicating that complexity via product features and benefits, without inadvertently misleading or oversimplifying, is not without its difficulties. Small print and jargon creep in as compliance teams seek, rightly, to ensure that information is correctly presented. Unfortunately, this introduces concepts that can leave the average consumer bamboozled and T&Cs that busy people, realistically, don’t have the time to read and digest. This is exacerbated in the digital age, with its fast pace and shrinking attention spans.

The regulator has watched this balancing act, seen where its previous efforts haven’t quite addressed the broad issues, and taken the more holistic, principle-based approach of introducing the Consumer Duty.

The Consumer Duty builds on previous regulation and the majority of FS firms would rightly claim to be already acting in consumers’ best needs. Commercial priorities are powerful, however, and can influence even the most well-intentioned. Decisions to close regional bank branches or to stop sending print mail to save money, for example, leave service and information gaps. Not everyone is digitally savvy. Most of us hate waiting on confusing phone lines and some older customers even still prefer to use cheques.

From a marketing perspective it’s hard to avoid feeling that there are opportunities in all of this. Customer-centricity is key to most truly successful companies and being customer-oriented is something to strive for to convert and retain customers. Yes, the Duty clearly seeks to ensure that profit isn’t prioritised over the value and support that consumers receive, but it also acts as a refocusing on ensuring that products and services are right for their target consumers and that they are well communicated. Meeting the Consumer Duty in providing a great, well-tailored, communicated, and supported product or service, and being commercially successful, can very obviously coincide.

More firms may evolve to focus on the markets or segments that are most profitable for them and then seek to serve those markets to the best of their abilities. New business models, services, and products may evolve to meet more specific segments, as others retreat or fall short in their efforts. A brand (or sub-brand) that supports customers left behind in the digital era by communicating primarily offline? If there is a market willing to pay a little more for this, well… why not?

There are also many examples of companies that are ditching the detail and creating simple to understand products, meeting specific needs, and backed by super-easy onboarding and servicing (check out Lemonade if you haven’t done so already Contents Insurance starting at £4* - UK Lemonade Insurance). More have developed, and are developing, in the fertile world of Fintech, where many marketing careers are being forged today.

So, whether at the level of creating customer-centric business models, products that more closely meet customer needs, or simply ensuring that the latest ad copy can be more easily understood, marketers are a key part of meeting the Consumer Duty challenge and ideally placed to spot and pursue the new opportunities it will ultimately create.

Some of the work that many sales and marketing teams are doing right now in product reviews and communications testing might not be sexy enough to win awards. It is vital work, however, in ensuring that consumers get the best service from one of the UK’s most important industries. Some of it will be accolade-winning and truly disruptive, however, and it will be exciting to see what comes next. The foundations are being laid for something great.

If you’re an FS marketer and you’d like to share some of the work you’ve been doing (and if you believe that your work to be Consumer Duty ready IS in fact award-worthy!), then please share your views in our LinkedIn group.

This article was written by Ben Grainger, Channel Marketing Lead at Allianz and Communications Ambassador for the CIM London Committee. Find out more about the CIM London Committee members here.