As we enter 2019, a number of changes lie ahead for the financial services sector. There’s the long-awaited Motor Finance paper, the end of PPI, Retail Distribution Review (RDR) on Financial Advice, Claims Management Companies (CMC) Authorisation, Senior Managers Certification Regime (SMCR) within Consumer Credit and over the last couple of days, the FCA’s probe into cryptocurrency transactions. These are just a few of the areas of regulatory focus, all of which will result in industry change in some form.

In its 2018/19 business plan, the FCA is very clear on its expectations on firms’ culture and governance across all sectors. The key is being able to demonstrate that compliant, positive behaviours are being driven to ensure that consumers benefit from the right outcomes.

Below our Change Consultant, Tony Jobson, shares his insight on change, how preparation and prioritisation can support your business throughout change, big or small.

“So, what is it about Change?

This simple word can create a whole range of emotions in us. Excitement, fear, apprehension, denial – all can appear and disappear in moments or become barriers for us as we move forward.

When we think about Change it is often in the context of physically doing something differently; moving to a new house, getting married or divorced, starting a new job, being made redundant or changing career direction. Change can be directly related to us as individuals, impacting on our lives and the way we do things. We may instigate the change, or more often, it is as a result of decisions made way beyond our control.

World politics, the turbulence of economics, natural events – being in the wrong or right place at the wrong or right time – we sometimes have no say in how a particular piece of change begins or how it develops. What we can have some control over is how we understand, react and embrace or reject the different circumstances we find ourselves in. Of course, in history, there are countless examples of people doing extraordinary things in extraordinary situations, which draw awe and admiration from observers.

However, I’m more interested in ‘ordinary change for ordinary people’. Back in the day, asking someone to move desks or maybe offices were major events. Today, as technology frequently becomes a common part of the workplace, we still have those internal feelings. How we understand and deal with our reactions is something we can do something about – we just sometimes need a little help, or more importantly some space to think and breathe!

How often do we hear about a change in process going wrong? A new system being introduced and the time needed to be invested afterwards to ‘correct’ the way of working? Training in new regulations that becomes a battle of wills rather than a smooth transition? Or increasing productivity but destroying colleague engagement along the way?

My submission is that these scenarios play out all too often.”

How can Kind Consultancy help?

Looking carefully at how we prepare people for forthcoming change events can make or break a team, business or industry. At the very least it can stall progress. Consider Brexit … with just three months to go – the apparent lack of planning, conflicting personal and political agendas together with ill-judged negotiating has led to paralysis in the boardroom, investment in industry drying up and near-panic for companies who trade with European neighbours. Sound familiar? It’s a classic Change case study!

Kind Consultancy has been supporting organisations in Governance, Risk and Compliance for the last 6 years, with access to experienced individuals who have been part of the of the change revolution and have been involved in successful and unsuccessful change programmes. This experience coupled with a unique approach to the People Side of Change allows them to help leaders, teams and individuals on their own change journey.

Typically, our consultants will look at key aspects of a business, such as culture, leadership, reward & recognition. This flexible framework can guide business leaders of all levels on a path of prioritisation, coupled with individual and team discussions, coaching and mentoring sessions, best actions can be agreed to achieve business objectives.

For more information on how Kind Consultancy can support you, please email info@kindconsultancy or call on 0121 643 2100.

In all types of Financial Services products, one of the complaints you hear most frequently is that you have to frequently switch providers to get the best deal, by taking advantage of special rates and offers that are only available to new customers. The insurance sector is currently facing particular criticism on this front, with a new Which? investigation this week finding that customers with combined policies owned for longer than a year were paying on average 38% more than new customers. The results only get more concerning over time, with policies that were four to six years old found to be 54% more expensive compared to prices paid by new customers.

Earlier this year,  the Association of British Insurers and the British Insurance Brokers Association announced a list of “action points” aimed at tackling this problem, with an overall goal of “reducing excessive differences between premiums for new and existing customers”. Firms belonging to either of the two industry bodies will pledge to take preventative measures to ensure that loyal customers are not “unfairly penalised” at renewal time. They will also need to reassess the fairness of pricing strategies, with insurers reviewing their pricing for customers who have been with them for over five years.

The plan applies to home, motor and travel insurance, but so far pet and health insurance are not included. In a press release this morning ABI chairman Andy Briggs said “The renewal market simply doesn’t work where loyal customers get charged much more than new customers” and that “These new guiding principles and action points are a positive initiative by the ABI and BIBA… to demonstrate that the whole industry recognises this is an important issue that needs to be addressed”

The treatment of existing customers is also on the minds of regulators, with it highlighted as a key priority in the FCA’s 2018/19 Business Plan.  The plan stated that they “aim to ensure that existing customers enjoy the benefits of increased competition and innovation” and that “firms should not give longstanding customers less attention than new customers or treat them in a way which results in poorer outcomes.” They did note that many firms have made progress on centring existing customers in their business models, and while there has definitely been a growing recognition of this issue in the industry over the last decade, there’s still a long way to go. Hopefully, with these new ABI/BIBA plans, the insurance sector can lead the way in prioritising and rewarding longstanding loyal customers.

Do customers need simpler pension choices? Last month’s Retirement Outcomes Review saw the FCA calling on providers to simplify retirement choices, improve customer engagements and most interestingly to establish drawdown “investment pathways”.

The FCA suggests that these pathways would be ready-made options, designed to enable consumers to either take the money over a short period, take money as an income in retirement or stay invested for a longer period of time with only occasional withdrawals. Three years on from the pension freedom reforms that made many of the current invest-and-drawdown schemes possible, the FCA is concerned about the value for money in drawdown, especially the significant variance in charges which are sometimes complex and difficult to compare. The FCA plans to force firms to show a straightforward one-year charge figure in pounds and pence in the key features illustration they provide customers. They also made it clear that they have “not ruled out” bringing in a cap on drawdown charges and hinted that this might be used against firms that don’t introduce investment pathways.

The FCA’s research shows one-third of drawdown consumers 100% invested in cash, and they believe half of those are likely to suffer on income in retirement. The new rules would force consumers to take an active choice before being placed into cash. They also found that as many as 60% of consumers had not taken any advice about drawdown and were not sure about where their money was invested and that customers could be receiving up to 37% more retirement income by investing in a different mix of financial assets rather than cash.

If this creates a new area for customer complaints or remediation, Kind Consultancy is perfectly positioned to supply you with both interim and permanent resources with extensive experience and expert-level knowledge in this area. Contact us on 0121 643 2100 or e-mail selena@kindconsultancy.com.

Selena Tye

Are people using more high-cost credit? Earlier this week the Financial Ombudsman Service published their annual review, which showed an overall 4% rise in banking and credit complaints. Excluding PPI, consumer credit complaints accounted for 24% of all new complaints over the last year and the numbers get even more concerning when we look at the increases in complaints about specific credit products and services. Complaints about payday loans are up 64%, complaints about hiring, leasing and renting are up 73%, and complaints about home credit have increased by a staggering 146%. 1 in every 4 new complaints that wasn’t about PPI involved consumer credit in some way.

To some degree, these numbers are the result of the increase in the number of people using credit and the amounts involved rising – it is clearly a key area for regulatory change in the immediate future. Should financial businesses be doing more to help customers plan for and avoid the risks that come with high-cost credit? What can they do differently?

Yesterday, the FCA published the outcomes of their high-cost credit review, setting out new proposals designed to protect people who use high-cost credit and overdrafts. They’re bringing in some immediate changes concerning transparency around overdrafts, with the end goal described by Andrew Bailey as “rebalancing in favour of the customer”, but they’re also now seeking input for consultation on a much wider-ranging set of changes still to come. While the overdraft issues are grabbing the most media headlines, the same review also has news concerning home-collected credit and catalogue credit and store cards – with plans to strengthen protection for vulnerable users of high-cost credit, raising standards in sales practices and disclosures and introducing new controls on refinancing. The FCA is estimating that these first set of changes alone will save consumers over £34 million per year, and I’m sure we’ll see even more sweeping changes after their consultation period.

Selena Tye