Friday, August 12, 2022

Money Matters: Consumer Duty Regulations

 Earlier today, the Financial Conduct Authority (FCA) announced the implementation of a new Consumer Duty regulation. This will be game changing for consumer protection.

Moneyhub, the market-leading Open Data and payments platform, has announced that its Open Finance technology enables financial services businesses to ensure compliance with the new Consumer Duty.


I had a chance to learn more in this interview.

Vaughan Jenkins, Business Development Director, Moneyhub


  • What does the new Consumer Duty regulation mean for businesses?


The Financial Conduct Authority’s (FCA’s) new Consumer Duty regulations are designed to raise the bar on consumer outcomes and place several requirements on financial services organisations serving retail customers. The regulations not only cover products and prices but also the service and communications between the customer, the product provider and the intermediary, if there is one. 


Businesses must provide products and services that are right for their customers, focusing on their real and diverse needs. This includes serving those that are vulnerable due to health or personal circumstances. Firms will have to demonstrate suitability from product design, marketing and from the point of sale to throughout the lifetime of the contract.


  • How will this impact consumers?


The Consumer Duty states that firms “must act to deliver good outcomes for retail consumers”. Consumers will benefit from helpful and accessible customer support as well as information that is not complex or over-complicated. The Duty will also require fair value in charges and fees.


Firms have until July 2023 to address any issues before the regulation comes into effect and have to have a plan in place by the end of October. These measures should impact consumers by improving outcomes and ultimately enhancing financial wellbeing.


For the FCA, an important driver of change is the asymmetry of information - which means the gap between the knowledge of consumers and financial services businesses. This leads to the misselling of unsuitable products, which increases the risk of negative outcomes. When consumers are better informed, they make better decisions.


  • Why should businesses consider Moneyhub's services, especially in light of the new regulations?


Holistic financial wellbeing can only be achieved through a two-way exchange of information and insights. Moneyhub is an Open Data and Open Finance platform that enables companies to transform data into personalised digital experiences and initiate payments. Both Open Finance and Open Data empower consumers to share their data after giving explicit consent, therefore enabling providers to use this data to identify and develop innovative new hyper-personalised products based on a sophisticated understanding of needs and behaviours.


Moneyhub’s Open Finance and Open Data technology has Consumer Duty compliance baked in, unlocking a win-win for both businesses and consumers. Companies benefit from the ability to build new services whilst ensuring adherence to the Duty. Consumers have access to better services which suit their needs, as well as an enhanced duty of care unlocked by providers’ ability to identify early warning signs of financial issues and then take appropriate action to mitigate them.


Moneyhub’s Open Finance Technology can aggregate account information from the widest range of sources in the UK. We can draw on information from 200 UK financial institutions and 700 products.


Our technology can also analyse and categorise income and expenditure, evaluate historic transactions, build budgets and forecast cash flows. We enable businesses to identify potential vulnerabilities in their customers based on analysis of their behaviours, transactions and financial decisions, as well as detecting changes in personal circumstances.


Moneyhub can also provide content and notification “nudges” which prompt consumers to take positive actions which improve outcomes.


The Consumer Duty is likely to prove a milestone in the development of Open Finance and Open Data. Moneyhub raises the bar on customer-centricity, with improved customer outcomes and Consumer Duty compliance baked in.


To find out more about the new rules, you can visit our Consumer Duty resource page. 



Keep reading to learn more:

Moneyhub, the market-leading Open Data and payments platform, has announced that its Open Finance technology enables financial services businesses to ensure compliance with the new Consumer Duty.

 

The Financial Conduct Authority’s (FCA’s) new Consumer Duty regulations are designed to raise the bar on consumer outcomes and require businesses to:

 

·       end rip-off charges and fees

·       make it as easy to switch or cancel products as it was to take them out in the first place

·       provide helpful and accessible customer support

·       provide timely and clear (rather than lengthy and complicated) information, that people can understand to make good financial decisions

·       provide products and services that are right for their customers

·       focus on the real and diverse needs of their customers, including those in vulnerable circumstances, at every stage of a product’s lifecycle, and in each interaction

Moneyhub’s Open Finance solutions have compliance built in. They enable clients to gain the required insight into their customers’ complete financial position and any potential changes in their circumstances, which is key to fulfilling the Consumer Duty.

 

To aid understanding and educate the market, Moneyhub has published a blog discussing “What, why and how to comply” with Consumer Duty.

 

Sam Seaton, Moneyhub CEO, has also written an open letter to fellow CEOs, discussing the implications of the new rules. She wrote: “Moving towards an Open Finance-based, data-driven, customer-centric model is transformational for businesses and good for both profitability and efficiency.

 

“We’ve come a long way, but there’s a long way still to go – and the next leap forward is

the move to aggregating individual customers’ data, from banking and pensions to loans,

investments, mortgages and properties, and making use of the insights of Open Finance.

 

“Consumer Duty certainly presents an alarming array of demands and challenges, but it also

presents an even broader array of opportunities. Providing the data-driven insights that can underpin individual, personalised propositions like this is at the heart of what Moneyhub does. And we can provide them either directly to the customer or, with the customer’s permission, to firms providing products and services, so they can create tailored communications and propositions to meet individual customers’ proven needs.”

 

Vaughan Jenkins, Moneyhub’s Director of Business Development, spoke at an Open Banking Excellence (OBE) Campfire to discuss the implications of the Consumer Duty.

 

He said: “During the FCA consultation on Consumer Duty, Moneyhub identified Open Finance as the solution to help bridge data gaps to evidence outcomes, and significantly reduce the cost of compliance.

 

“In addition, it opens new opportunities for businesses to use consent-based consumer data to identify and develop new hyper-personalised products based on needs and behaviours.

 

“With ongoing engagement, it provides a means of identifying early warnings of issues and the ability to act to limit detriment using an evidence base. The behavioural insights available are significantly enhanced by the adoption and facilitation of Open Finance powered tools.

 

“By adopting Open Finance, businesses can ensure that they are exercising appropriate governance across the value chain. Consumer Duty compliance is an integral feature of Moneyhub’s Open Data powered technology.”

 

Moneyhub’s Open Finance Technology can:

 

·       Aggregate account information from the widest range of sources in the UK (200 UK financial institutions and 700 products plus international account aggregation).

·       Analyse and categorise income and expenditure and create a net worth position from both connected and manually input assets and liabilities.

·       Evaluate historic transactions, build budgets and forecast cash flows.

·       Identify the vulnerability of potential consumers through behaviours, transactions and financial decisions.

·       Detect changes in personal circumstances through connected financial accounts such as cash movements, changes in income and payment commitments or account closures

·       Provide content and notification nudges to consumers to improve outcomes and address changes, as well as alerting the client’s trusted advisers if intended outcomes are no longer relevant or achievable.

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