Craig Hamilton, Group Conduct & Compliance Director at Phoenix Group, discusses some of the strategic questions, opportunities, and challenges that Phoenix is wrestling with as it moves into delivering the FCA’s new Consumer Duty

Is the Consumer Duty an opportunity?

As we know the new Consumer Duty seeks to increase consumer protection in the retail market and foster effective competition in the interest of consumers.  We are supportive of the direction and intent. For us and our customers, the Duty is aligned to our strategy to help them ‘secure a life of possibilities’. We see opportunity here as it places emphasis on doing even more to support customers and to help improve their understanding of products and services we provide.

We have invested significantly in focusing on good customer treatment and outcomes across our businesses in recent years, and continue to do so, especially in the areas of vulnerability and protected characteristics. The Duty will support our focus particularly in key areas such as: customer communications; and customer understanding, including guidance and advice services.

Where are we now?

Our gap analysis work has identified that we have many good foundations in place. Some of the areas we’re thinking about as we move to Phase 2 are the following:

• The opportunities - The Consumer Duty offers us an opportunity to be ambitious and review the services we provide, and the risks we take doing this, versus the customer’s outcomes we want to deliver in order to ‘help secure a life of possibilities’. We welcome the FCA’s indication that it plans to carry out a holistic review of the boundary between advice and guidance. To avoid the risk of breaching the rules of advice, or foreseeable harm in not being able to guide our customers, we and many others have consistently called for this. Our aim is that it leads to a rulebook definition of guidance or ‘personalised guidance’.
• The need for proportionality - The application of the Consumer Duty needs to be reasonable and proportionate to our customers and Phoenix. We welcome the FCA’s clear emphasis on this in the final rules. Although the new regulation is cross-sectoral we know there is no one-size-fits-all here and we are likely to face particular nuances in relation to our business and customer profile.
• How do we evidence fair value? - We know a focus in the next phase of work will be what fair value is and how it can be evidenced.  We will look at how it impacts different groups of customers, and where we need to go further than the ‘value for money’ work we do today.  We already utilise a wide range of factors to determine price and fair value, and these currently apply in naturally different ways across our various product books.
• What management information will we need? - We are working on the development of analytical tools, management information and objective measures to demonstrate we have delivered good outcomes for our consumers and customer understanding. The volume of differing data and processes involved across different parts of our Group presents a natural challenge in evidencing good customer outcomes on a consistent basis. This is why a key priority is further investment in data management, analytics and automation of our reporting.
• How flexible can we be with our communications? - We are hopeful that Principle 12 will mean regulators allow more freedom for us to meet our customers’ needs  in ever smarter ways.  Our customers want us to ‘keep it simple’ but this gets hampered at times by the more prescriptive rules on communication, and the legalese required. We are focused on getting the best of our communications today rolled out across all customers.
• What does the Duty mean for in-flight strategic projects? - We have invested in improving customer experience, value and services and continue to do so with migration from out-of-date administration systems and offering new digital services for example.  We are working to ensure our in-flight strategic projects and migration activity that will deliver improvement in products, service and experience for our customers, are closely connected  to our Consumer Duty work. 

Where do we go next?

There are clearly still a number of significant questions and challenges to resolve but ultimately, we see this as an opportunity to do even more to support our customers and to help improve their understanding of products and services we provide.