RegTech firm Aveni has claimed financial services firms need to act now to prove they really put the customer first, following a recent survey by the company.
The company said that if companies are unable to prove this, they may risk non-compliance with Consumer Duty regulation.
The survey found that 1 in 4 CROs estimate that their compliance costs will climb by over 50% and 2 in 3 estimated it will increase by up to 50% as a result of Consumer Duty legislation.
Aveni said, “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.”
Aveni has established an AI based platform which analyses all customer interactions and mitigates against a range of risks from conduct and complaints to customer vulnerability.
This elevated level of risk insight, Aveni claims, will become essential in meeting data-intensive demands of Consumer Duty. The AI-enabled technology gives businesses an improved level of understanding of their customers and outcomes and puts data-driven technology at the heart of their operating model.
Of the compliance and risk officers interviewed, 59% stated that customer feedback does sufficiently affect business decision making due to a lack of monitoring and analytics abilities.
Meanwhile, less than one in four CROs were confident that they can accurately identify vulnerable customers during a call, with 40% finding it difficult to monitor and analyse customer vulnerability and complaints at all.
Despite FCA warnings that complaints data is not a valid indicator of customer outcomes it continues to be a metric deployed by CROS, with 93% surveyed in ths research saying that they still use it.
Aveni found that over 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 at 89%, technology to monitor customer data at 78%, and ability to automate the quality assurance process at 70%.
Aveni said the investment in tech was considered much more imperative compared to a 41% who had a 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.
Aveni CEO Joseph Twigg said, “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 are able to 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.”
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