Words: Niamh Smith
Julian Sampson argues the TCF framework was sufficient in improving engagement with customers.
Financial services remains divided on the necessity of the introduction of consumer duty, according to panellists at FP Live!.
The Financial Conduct Authority (FCA) introduced Consumer Duty in July 2023, which set clearer and higher expectations for the standard of care that firms provide to consumers.
At Financial Promoter Live!, Cara Norton, chief customer officer of Snoop, said the introduction of consumer duty was necessary as not all businesses were “doing the right thing” on their own accord.
“You have to have some sort of oversight there to ensure banks are embracing the challenge and not pocketing their profit, but reinvesting into the customer,” she said.
Jonathan Winchester, chief executive at Insight6, agreed the FCA had to take steps to ensure all financial institutions remained focused on delivering the best customer experience possible.
“80% of organisations do the right thing and 20% of organisations let us down. This [regulation] helps sort out the 20%, which is very important,” he said.
Winchester added that Consumer Duty has proven effective because there will typically be a small amount of employees within the workforce that understand customer experience and want to make a positive change, however there will be a larger number people who have resistance to this idea.
Since the introduction of Consumer Duty, those with resistance have become more customer-centric.
As a result, the journey to acquire the budget needed to implement new approaches that improve customer outcomes and experience has become easier, according to Winchester.
However, Julian Sampson, head of lending at TWM Solicitors, said the introduction of Consumer Duty was unnecessary because FCA’s existing Treating Customers Fairly (TCF) framework was sufficient.
The cultural framework was introduced in 2006 to help supervisors assess the risk a firm’s culture presents to its ability to treat customers fairly.
According to Sampson, there are similarities between the way businesses dealt with clients to comply with TCF and their current actions to comply with Consumer Duty.
“Businesses that were appropriately adopting TCF in a positive framework would have probably covered off most Consumer Duty requirements already,” he said.
The sentiment that firms should understand a customer’s best interest and engage with them in a positive, creative, and active manner has remained, Sampson added.