2023 finally sees the Financial Conduct Authority’s (FCA) Consumer Duty requirement come into force. It brings with it a simple principle – to deliver good outcomes for retail customers. This is underpinned by cross-cutting rules that bring clarity to the relationship firms must develop with their customers.
“Our rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met.” (FCA)
As well as promising to end ‘rip-off charges and fees’, the aim is to make it easier for customers to cancel or switch products and access customer support.
But this is about much more than improving service and removing sludge. It is fundamentally about creating an impetus to ensure the cultures of FS firms embrace a customer-first approach.
Worrying signals
The 2022 Financial Services Culture Board (FSCB) survey provides some worrying signals on preparedness. Not only did scores on all but one of their 6 ‘customer focus’ questions see declines over the last two years but variations across business lines are often striking.
The customer focus of those on the front line is often not matched by those in central functions. As such, the ability to develop coherent customer journeys could be challenged.
While the survey gives us a useful indication of what is happening, the question facing the banks is ‘Why?’ and what can they do to create true cultural alignment?
The sentiment expressed in surveys is the result of the behaviours people experience around them. CultureScope can give us a better understanding of those behaviours.
A behavioural approach
CultureScope helps us understand behaviour from two perspectives: the personal behaviours of individuals, and the organisational behaviours they experience around them. By mapping these to outcomes, we can predict which behaviours drive which outcomes.
Where the desired personal behaviours are absent, the focus is on building capability. Where organisational behaviours are the problem, the focus is on creating the opportunity or motivation for the behaviour to manifest.
By connecting outcome to behaviour, CultureScope can identify why a firm isn’t achieving the outcomes required but also which behaviours to focus on and in what order.
Step-by-step
We have identified behaviours in the CultureScope framework that typify a culture meeting the Consumer Duty requirements. To provide actionable and predictive insight our approach is to:
- Assess both personal and organisational behaviours using the CultureScope framework
- Understand which behaviours drive the metrics developed for the implementation of Consumer Duty.
- Help the firm identify and plan interventions using our Culture By Design methodology
- Remeasure 6-9 months later to assess progress and adjust interventions.
Whether it is new regulation, driving inclusion, change or safety, we believe culture should be the hero and not the villain. CultureScope’s mission is simple – combine the best elements of scientific and applied research to develop and deploy behavioural diagnostic and predictive analytical tools that help organisations achieve their mission.
