Survey suggests Consumer Duty tall order for many financial services firms

The new Consumer Duty rules could be a tall order for many financial services firms, a recent survey from Baringa suggests.

The survey of 2000 consumers found that almost three quarters (72%) do not fully read or understand the terms and conditions of a new financial product before purchasing it, and almost a third (31%) are not satisfied that providers clearly explain the expected value or outcomes to them. 

The news that the implementation date has been pushed back from April 2023 to July 2023 for new and existing products for sale will therefore be welcome to many.

Zoe Young, a partner at Baringa, said: “Many customers do not fully engage with, or understand, the financial products they are signing up to, and unread terms and conditions are a symptom of this.

“As inflation mounts and a possible recession looms, many products, such as reliable insurance and secure investments may become less affordable, yet more important. This increases the importance of financial firms ensuring their products are understandable to customers.

“On a wider level, without defining what good outcomes are and how to measure them, companies will struggle to make meaningful progress and risk failing to meet the Consumer Duty requirements.

“Firms should step back and view these changes as an opportunity: the Consumer Duty is a chance for financial services companies to realign their strategy and forge a closer link between customer service and corporate strategic objectives.