Putting customers’ needs first is a mantra that all responsible organisations should strive towards.
To ensure this happens, the Financial Conduct Authority (FCA) has introduced Consumer Duty, a new piece of regulation that specifically targets the financial services industry.
Customers, whether financial services clients or end consumers, are the foundation of what business process outsourcing (BPO) providers do, therefore it stands to reason that BPO will be impacted by the new regulation.
Vinaya Ganesan, General Counsel at Firstsource Europe, explains how Firstsource has been preparing for the launch of Consumer Duty and what the future holds for outsource providers and their clients.
How has Firstsource been preparing for the introduction of Consumer Duty?
For starters, we took the view to challenge our status quo. We combined our internal expertise with industry subject matter experts (SMEs) to do what Consumer Duty is asking us to do – be more challenging of each other, focus on the customer and deliver better outcomes.
As a result, we reviewed every single one of our regulated relationships on an individual business line basis and considered how material we are in the process, how much discretion we have over the outcome, what outcomes we are managing and whether our existing reporting is good enough to evidence the outcomes we are providing.
Consumer Duty officially launched on 31 July, was Firstsource ready?
Having laid the groundwork, the end result was a new Consumer Duty governance framework, new risk assessment tools, new training material, new annual objectives and additional reporting and monitoring requirements.
In summary, rather than just assume we weren’t going to be impacted we’ve used the new regulation to ensure we are even more focused on customers, our clients and the outcomes we provide for them.
What was the biggest challenge?
Arguably, our biggest challenge was deciding how we should define ourselves under the new regulation. We had two choices: we could either decide that we were an outsourcer operating under the mandate provided by our client and therefore Consumer Duty was their issue and not ours; or, we could take the view that two regulated organisations working in tandem to deliver an outcome had a better chance of success than just one and classify ourselves as a ‘distributor’, accepting the additional responsibilities that created for us.
Our answer was to classify ourselves as a ‘distributor’. That means we are better placed to share the insights we are capturing on our customer processes and suggest improvements.
What does this mean for Firstsource’s financial services clients?
It means we can ensure that our clients have the right information going back to them so that they can more easily improve, monitor and control the processes and outcomes we are managing.
Overall, a client partnering with us post-Consumer Duty now knows that we fully understand the new regulation and that we can – and are prepared to – share the regulatory responsibilities that Consumer Duty creates.
In my view that provides us with a significant USP, not just in the financial services market but all of the other markets we operate in as well. Consumer Duty sets a bar not just for financial services but for customer experience across all markets, the fact that we understand those requirements and can deliver on those responsibilities is a huge advantage for us.
What happens next?
Consumer Duty has already presented lots of very interesting opportunities for us, but there will be more to come. Not least the opportunity to broaden our services into more challenging customer segments/markets where our expertise with customer experience and our regulatory understanding of Consumer Duty can have meaningful impact on the risks our clients are managing.
Then of course there is digital and artificial intelligence (AI), two areas where Firstsource already has significant capability in both the UK and US markets, but where we believe we can develop further and have an even greater impact on the outcomes, costs and risks our clients are now being asked to manage.