“Consumer Duty that will set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first.”1
13 months on from the launch of the Consumer Duty, it is forcing change – but have firms truly grasped the message or are they simply repackaging previous practices? Certainly, from an employee Training & Competence (T&C) perspective, most L&D practitioners would agree that little has materially changed, despite widespread hybrid working and the specific focus on T&C within two of the four outcomes (Consumer Understanding and Consumer Support).
It would appear that I am not alone in calling out this apparent glacial pace of change in this area. The regulator continues to reference failings in firms’ T&C regimes as a root cause for a number of enforcement actions. They also continue to call out inappropriate or bad practice – like ‘one-size-fits-all’ training, not tailoring training to job families, and ticking boxes rather than ensuring and maintaining competence. From recent Dear CEO letters calling for action to address inadequate Financial Crime training to specific areas of Consumer Duty improvements where the FCA has observed that staff aren’t trained well enough in terms of having complex conversations with customers, it’s pretty clear (to me at least) that something has to materially change.
So arguably we have a double whammy: an increase in the competence outcome and a reduction in the effectiveness of the training and support.
This isn’t necessarily a fault of the hardworking L&D practitioners in firms, rather a lack of funding and acceptance that change is required from more senior managers. We have run 20 webinars in the last 24 months and most of those have focused on the introduction and subsequent operation under Consumer Duty. It’s not unusual for our registration numbers to max out at 1,000 for each session and, on average, 500 to attend each month. The point being we get a lot of insight into a large cross-section of firms, and we always conduct audience polls.
The number one enduring challenge faced by all firms remains “evidencing good customer outcomes”. In this respect we are calling on the FCA to simplify the requirement and provide firms with a best practice template by sub-sector. In other words, specify “this is what we expect you to show us.” This will save the sector literally millions of pounds, (which is currently earmarked for the UK consumer to fund and is certainly contrary to the very essence of the Duty) and immediately drive-up standards and make enforcement way easier. And there is nothing stopping the FCA revisiting the sub-sector templates, to refine the requirements as required. It is a neat, simple solution to a huge problem.
Frequently appearing as another significant challenge and contender for second place is how firms support their people. Many firms are reporting increased levels of attrition, post-Covid, and finding it increasingly hard to attract talent into their sector. On a macroeconomic basis, the UK has record-high levels of employee sickness and absenteeism and the leading cause is mental health / wellbeing.
If we pause for a moment and consider, regardless of your business model and how you choose to go to market – face-to-face, telephone, online, digital-only – then your people play an incredibly important role in the delivery of good outcomes. I know from some of the questions and comments we have received in past webinars that some individuals represent firms who would appear to genuinely believe they can “systemise” the customer experience and effectively remove the employee from the equation. Personally, I do not agree this is feasible on a macro-scale. I’m even dubious if it is achievable (or would be successful as judged by the consumer) in any business.
And, if we pause for thought and consider that according to the Institute of Customer Service’s (ICS) UK Customer Satisfaction Index (UKCSI) – which is regarded as the leading barometer of average UK CSAT across 13 sectors (including financial services) –customer service standards have fallen to an all-time record low.
In short, I do not subscribe to the philosophy that a provider can dumb-down the customer journey so that there is little need to train and support employees beyond the most basic level. The workplace gets more complex and demanding of the first line every year and legislation like Consumer Duty means that the in-role competence requirement of the average front-line employee must rise if the employer is to deliver consistently good customer outcomes. And the key word is consistent.
In a recent webinar, one participant asked the question: “How was the firm to deliver consistent levels of good customer outcomes if there was such a diverse range of competence across the employees serving those customers”. A challenge made harder when most firms do not have a meaningful, timely, measure of employee in-role competence.
Whilst pre-Covid and, by default, pre-Consumer Duty, the level of in-role competence for front-line and back-office staff was arguably lower, the situation was eased somewhat because in almost all instances everybody was working from the office. This meant that every employee had the benefit of peer-to-peer learning (where we get 70% of our in-role competence from) and hands-on support, management, and oversight.
13 months ago, the competence bar was raised, yet most firms were still working hybrid, if not fully working from home. So arguably we have a double whammy: an increase in the competence outcome and a reduction in the effectiveness of the training and support. Is it any wonder then that we see the regulator getting increasingly frustrated, calling out poor practice in relation to employers’ Training & Competence regimes, rising employee attrition and problems with recruitment and retention?
The time for change is here – if the time hasn’t already passed. Outdated, lowest-cost-to-serve, fastest-to-deliver, tick-box training has no place in the world of Consumer Duty. Not only will your consumers suffer a good customer outcome lottery determined by the nature of their enquiry and competence of the employee fielding it, but your employees will become increasingly disenfranchised. The employee point is not to be overlooked. When employees feel they do not have the skills, tools and support they need to do their job, they exit.
It should also be pointed out that this tick-box model for employee training and ongoing assessment provides no meaningful data to assist with evidencing good customer outcomes. When the regulator says that you should find “new sources of data” to assist you in presenting a holistic view of good customer outcomes, dynamically monitored and correct employee in-role competence as a source of data would not only provide an early warning system for consumer detriment, but also a rich source of additional evidence.
Every week a new financial services firm dumps this out-dated and ineffective practice and, to the delight of the L&D practitioners in that business, embraces an AI-powered continual assessment methodology. We call her Clever Nelly – or just “Nelly” to our customers.
Unlike the traditional approach, Nelly isn’t concerned with ticking boxes or even training per se. She has a different outcome in mind and that outcome is achieving and maintaining optimal, individual, employee in-role competence. It doesn’t absolve the employer of having to train the employee in the first instance but, post-training, Nelly takes control.
She does this in the flow of work, often using less than 1 minute of an employee’s working day, gently and supportively assessing competence, identifying gaps and helping the employee repair them and maintain competence.
Simultaneously she scans the workforce looking for “flight risks” (employees presenting as likely to exit the business in the next six months) and privately and confidentially assessing wellbeing and employee sentiment; working with your existing wellbeing suite to help support employees that need it.
All of this data (some depersonalised for privacy) is consolidated and available to the employer as a unique source of insight. Not only can it be extracted for good outcome evidencing, but it can also act as a risk radar, informing management and second line where gaps exist that are likely to cause detriment. Once identified, management can best decide how to act – visibility of this sort is a scarce commodity in most firms.
Employees embrace Nelly because her AI enables her to operate with each person as an individual. No more generic training or pointless stuff, just what each individual evidentially needs to get them to the required optimum. By the way, the average level of in-role competence at socialisation of Nelly is just 54%. No wonder the regulator is concerned that Senior Managers are not taking employee T&C seriously.
If you have concerns that your approach to employee T&C is now falling behind what is required and you want to offer better support and oversight to your (already stretched) employees, drop me a line at adrian@elephantsdontforget.com and I will make arrangements for one of our experts to show you what an increasing number of your peers are doing and have agreed we can share.
