Under the Consumer Duty, firms are required to demonstrate that customers are receiving the right outcomes.
A good outcome is not always that an application for finance is accepted. Considering a customer’s individual situation may mean a good outcome for them is that their application is declined. Equally, a customer may receive a product that is suitable, clearly explained and delivered as designed, while still experiencing an outcome that is poor in practice.
HOW DO YOU MEASURE YOUR CUSTOMERS ARE RECEIVING THE RIGHT OUTCOME?
Whilst there is no specific list of what you should measure, firms need to make sure they are not just reviewing outcomes at a high level but delving more deeply into their customer journeys and outcomes. Ask yourself: are you measuring what matters to customers, not simply what is easiest to measure?
However you measure your customer outcomes, you should be able to correlate this with the four outcomes of the Duty. For credit products, how do you evidence that customers understand interest, fees, repayment obligations, the consequences of missed payments, changes to terms and the support options available to them?
Firms are expected to have:
- Management information – consider what you measure and how in-depth the information you review is.
- Customer research – evidence the type of information researched.
- Outcome testing – how is this evidenced and embedded within QA frameworks?
- Governance frameworks – is there a documented process in place to ensure key findings are reviewed by the Board to drive change where required? Reporting should be proportionate to the size of your retail business, but findings still need to reach the people who can act on them.
Most firms will monitor complaints, arrears, defaults, call waiting times, application declines, forbearance arrangements, repeat borrowing and customer satisfaction. Best practice, though, is to correlate this data to get an overall sense of customer outcomes, whilst ensuring each outcome is measurable in its own right.
THREE TYPES OF MEASURE.
As a guide, there are three types of measure you should consider for customer outcomes. Where possible, look to triangulate the findings.
- Process measures – these tell you whether something happened: information provided, assessments completed, support offered.
- Experience measures – was the information provided to the customer understandable, and was the process easy to navigate? Were different options explained and appropriate support provided? Is feedback on the customer experience being gathered?
- Impact measures – what happened to the customer as a consequence? Were repayments sustainable? Were customers easily able to resolve issues? Did particular customer groups experience different outcomes?
LOOKING AHEAD.
Whilst the FCA has recently consulted on simplifying and clarifying the scope of the Consumer Duty, with final rules expected in early 2027, what is clear is that retail customers in the credit sector will always sit front and centre of the Duty.
All credit firms should challenge their ability to demonstrate how they are supporting consumers in their financial objectives, whilst providing sufficient protection from foreseeable harm.
