Financial services firms must start proving that they really put the customer first or risk non-compliance with Consumer Duty regulation, according to a new survey from Aveni.ai.

With one in four (23%) Compliance and Risk Officers (CROs) estimating that their compliance costs will increase by more then 50%, and two in three (61%) estimate 26-50% increase because of Consumer Duty legislation the emphasis on consumer outcomes as a significant business metric is very apparent.

Therefore, it is an issue that must be taken more seriously at Board and executive level than it currently is, according to data collected by the UK Regtech firm.

Of the CROs interviewed, 59% stated that customer feedback does not sufficiently affect business decision making due to a current lack of monitoring and analytics abilities.

Less than one in four (19%) said they were confident that they can accurately identify vulnerable customers during a call, and 40% said they find it difficult to monitor and analyse customer vulnerability and complaints at all.

Despite Financial Conduct Authority (FCA) warnings that complaints data is not a valid indicator of customer outcomes it continues to be a metric deployed by CROS, with almost all (93%) respondents agreeing that they still use it.

The importance of monitoring, analysis and quality assurance are paramount to deliver the customer-centric components of Consumer Duty legislation. Investment in compliance must be made to achieve this and Aveni’s survey suggests that this is gaining importance.

More than 83% of those surveyed believe their companies will commit resource to meet Consumer Duty, but there are still some questions about where money should be invested at a senior level.

At the top of the investment priority list for Consumer Duty compliance CROs place staff training (89%); technology to monitor customer data (77%); and ability to automate the quality assurance process (70%).

The investment in technology was considered much more imperative compared to a 41% desire to hire more staff across quality assurance and customer service (41%). It was estimated that the cost of compliance would be higher investing in staff than investing in technology.

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Aveni CEO Joseph Twigg commented: “Consumer Duty brings it all back to the customer and the outcomes for customers will be the key metric on which all financial services businesses will be measured. Quality and Risk Assurance are no longer tick box exercises and will require a crucial role for CROs or Risk and Compliance Managers to meet the demands being placed on them.

“Technology is arguably the differentiator that will enable them to do this and enhance the regulatory and risk functions. This brings a whole new level of empowerment to the risk manager role and gives them the opportunity to maximise their value and effectiveness.

“With large investments being predicted and required to meet Consumer Duty it is vital that they can deliver, demonstrate, and prove truly positive customer outcomes. Arguably the risk manager has the potential to derive far greater business value through technology and should have the opportunity and authority to select and assess the systems being used. Without this there is a real chance for non-compliance and the seriousness of those consequences – financially and even legally – should not be under-estimated.”

The new Consumer Duty regulation from the FCA requires firms to act to deliver good outcomes for retail customers, to act in good faith, to avoid causing foreseeable harm, and to enable and support customers to pursue their financial objectives.

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