- 79% of over-45s are unaware of the Consumer Duty and 38% are unaware of the role of the FCA
- Consumers say most important standard for companies to adhere to is a clear explanation of fees and charges (44%)
29th June 2023: With consumer duty due to fundamentally impact how the industry supports customers, Air, the platform for later life lending professionals, undertook research to better understand whether its importance had made it onto people’s radars.
Perhaps unsurprisingly, nearly four in five older consumers (aged 45 and over) are unaware of the Consumer Duty (79%), with almost two in five also unaware of what role the FCA plays in the UK (38%)1. However, they did have a strong awareness of what good customer outcomes looked like citing a clear explanation of fees and charges (44%), checks and balances to avoid fraud (34%), and ease of contact (27%) as important.
Low Customer Awareness of Consumer Duty
Awareness was notably lower amongst women than men, with only 17% of women aware of the Consumer Duty compared to 26% of men. The same trend was evident in awareness of the FCA as a whole, with 70% of men aware of the FCA’s role in the UK compared to only 57% of women.
Beyond this general awareness of the Consumer Duty, less than one in ten (9%) older consumers in the UK knew the ramifications for UK financial services, while only 3% reported being aware of the specific measures, actions and requirements proposed within the regulation.
Of those consumers who were aware of the Consumer Duty, only half (50%) were confident that it would have a positive impact on consumers themselves. However, a far smaller proportion were confident that the Duty would have a negative effect (10%) and (18%) who felt that the Duty would have a significantly positive effect.
Optimism also broadly increased in line with respondents’ incomes, with 62% of those on an annual income of over £55,000 believing that the Duty would have a positive effect, compared to only 47% of those on up to £15,000 per annum.
But strong awareness of what a ‘good customer outcome’ looks like
Although awareness of the Duty itself is low and opinions on its effect are divided, consumers felt strongly around what a good customer outcome would be for them.
When older consumers were asked which principles were most important to them that financial services companies should adhere to, a clear explanation of fees and charges (44%), checks & balances to avoid fraud (34%), and ease of contact (27%) were the three main standards that consumers expect financial services companies to adhere to.
The appropriateness of the fees and charges for the service/product provided (26%) as well as providing literature and information that is clear and not misleading (24%) were also important.
|What Standards to you expect a company who you take a product out with to adhere to?
|Clearly explain all fees and charges
|Have checks and balances in place to avoid fraud/scams
|Be easily contactable if I have a query or need to make a change
|Make sure fees and charges are appropriate for the service/product provided
|Provide literature and information that is clear and not misleading.
Paul Glynn, CEO of Air, comments:
“While it will come as no surprise to many that the regulatory changes that the industry has been working on for the past year have not hit the radar of the most consumers, the standards that they expect from financial services companies are clear and will be delivered by this regulation. The need for customers to be protected from fraud and scams is something that the later life lending industry is arguably not only doing but is a step ahead with, due to the use of independent legal advice and a real focus on supporting vulnerability
“However, the desire for fees and charges to be appropriate and clearly explained goes to the heart of fair value and is something that, as an industry, we need to ensure we listen to. The remuneration that advisers receive needs to be commensurate to the high-quality service provided and we should not be afraid to question the status quo with the objective of providing good customer outcomes.
“Customer understanding and support are also part of the outcomes that Consumer Duty seeks to deliver, and this research clearly underlines how important customers think these issues are. As an industry, this new legislation provides us with the opportunity to review our systems and processes to ensure that, following the end of July, we are better positioned than ever before to support the increasing numbers of older borrowers who seek our advice.”