Gearing up for the FCA Consumer Duty Deadline for Closed Books
According to the UK Financial Conduct Authority (‘FCA’), the Consumer Duty means consumers should receive communications they can understand about products and services that meet their needs all while offering “fair value” – as well as getting the customer support they need, when they need it.
![Gearing up for the FCA Consumer Duty Deadline for Closed Books](/sites/default/files/2024-07/checklist.png)
Not only that, FCA has implemented a roadmap for UK-regulated organisations to comply with these requirements.
The financial services sector is now bracing for the second phase of the FCA’s Consumer Duty rules, set to come into effect on 31st July 2024. This final deadline follows the previous 31st July 2023 milestone for new and existing products or services that are open to sale or renewal.
This deadline applies specifically to products and services held in closed books.
With less than a month to go, firms need to urgently review their closed books and customer service processes and procedures and ensure they will meet the higher standards for consumer protection mandated by the FCA.
Various technologies can assist organisations in achieving Consumer Duty compliance ahead of the looming deadline. Solutions like 100% call recording, speech analytics, secure messaging channels, scripting tools, and sentiment analysis will help firms monitor customer interactions and outcomes.
Data analytics provides invaluable insights, spotlighting where customers may not be getting fair outcomes. Topic spotting and speech analytics detect potential compliance breaches and vulnerable customers in need of extra support. Integration across channels gives customers the choice to engage how they want.
What’s the upcoming deadline?
As mentioned above, the first deadline set by the FCA was 31st July 2023 and was aimed at all existing and new products and services.
This year, however, comes the second part of that with the FCA’s deadline of 31st July 2024 forcing financial services firms to comply with the requirements for products and services held in ‘closed books’.
A 'closed book' refers to insurance products such as home or motor insurance that meet the following criteria (according to the FCA):
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Policies can be renewed by existing customers
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The product is either:
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No longer available for purchase by new customers
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If it has been on sale for 5+ years, no more than 7.5% of active policies are sold annually to new customers
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If it has been on sale for less than 5 years, no more than 15% of active policies are sold annually to new customers
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The firm sells less than 10,000 policies annually to new customers
Essentially, a ‘closed book’ contains policies that are only renewed by existing policyholders, with no or limited numbers of sales to new customers.
By the 31st July deadline, firms must review their closed books and implement any necessary changes to ensure they meet the Consumer Duty requirements around fair value, consumer understanding, consumer support, and good outcomes. This may involve updates to products, policies, systems, processes, and staff training.
How can Sabio help?
Sabio combines its own technology with best-in-breed technology vendors across AI, CRM, Data and Contact Centre and have done so for nearly 30 years - so we understand the unique challenges our banking, insurance and other financial services clients face. Over the years, we’ve partnered with organisations like Davies Group and Marsh Finance to transform their customer experience technology. Sabio is helping these customers prepare for this final Consumer Duty deadline and then embedding into business as usual activity
For Davies, we consolidated their contact centre infrastructure onto a flexible Genesys platform. This improves customer service by offering customers greater freedom to choose how and when they communicate through a seamless multi-channel platform. while enabling Davies to easily scale their operations meeting surges in demand. The project encompasses 1,500 advisors across 13 business units.
With Marsh Finance, we integrated live chat and secure digital payments into their Genesys environment - boosting efficiency and meeting the FCA requirements around consumer choice and data security.
These partnerships demonstrate how, with the right technology and experience, firms can proactively address Consumer Duty rather than simply reacting to its demands. By putting robust measures in place now, financial institutions can avoid a last-minute scramble and ensure customers consistently receive fair outcomes.
The deadline for closed books is fast approaching.