Nostradamus 2: a look ahead to T&C in 2024


Last year, Jeff asked me to gaze into the future and share my thoughts about what 2023 held for T&C. For those who missed it, it’s available to read here.1 So, how accurate was I in my predictions and observations? Well, on the basis that none were lottery-ticket winning predictions, it will probably come as no surprise that I was on the money!

My macro prediction was that – despite all the hype around Consumer Duty – unless the FCA specifically targeted ineffective ‘one-size-fits-all’ training practices and a general ‘tick-box’ approach to regulatory compliance – we would see little material change in how firms trained and supported their employees. The reason being that – in the absence of a major step-up in enforcement on this issue – most firms would be very slow to change. And this first prediction would appear to have been validated by recent FCA rhetoric.2

The second major prediction was that firms would only move fast if there was a catalyst to do so – and there is no better catalyst than a positive one. Fines and enforcement have a place, but these are ultimately extrinsic motivators. Intrinsic motivators are far more powerful and are usually positively framed. E.g., firms will change their employee T&C regimes overnight if it gives them a competitive advantage and generates more revenue/profit.

we will see much more enforcement from the regulator over Consumer Duty failings.

In this regard, during 2023 more firms recognised the need to improve their in-house training practices because the current ones were falling short of what was required. One interesting datapoint that surfaced through one of the many financial services webinars we organised during the year was the fact that attrition levels – specifically during the first 180 days for new recruits – were reaching what some referred to as “all-time highs”. One of the main drivers being the inappropriate way in which firms were training and supporting their employees; particularly in a hybrid working environment. We had an article on this subject published in the HRDirector.3

This trend is looking like it is set to continue. Increasingly, more firms are now being forced to revisit their workplace learning practices for fear of failing to attract and retain the talent they need to run their firms. So, my first prediction for 2024 is that we will see an acceleration of change in how employers train and support employees; particularly recruits. Interestingly, this is likely to resonate well with what the regulator has been saying about workplace T&C and the need to make it personalised, specific and continual, rather than ‘one-size-fits-all’ and sporadic.

I also made a brief comment last year about some firms believing that they had already complied with Consumer Duty (particularly in the Wealth Management and IFA sectors) and were treating it much like TCF 2.0. Well, what we did see was a whistleblower inside SJP “outing” the blatantly unfair fee structures which has (eventually) led to SJP succumbing to public pressure and changing these. 4 Quite how senior management at SJP believed that these represented good outcomes for consumers, escapes me. But, in their defence, it was perhaps reflective of much of the mood music we experienced in 2023; with many firms believing they already complied with Consumer Duty and that their culture was “just fine thank you very much”. The lesson being, I think the majority of the financial services market underestimated Consumer Duty in 2023 and the extent to which the regulator expects firms to fundamentally change.

That said, regulation is only effective when it is strongly enforced. I also made some comments about increased enforcement and – whilst we have seen the FCA act immediately over retail savings rates, for example – we haven’t seen a wholesale step up of enforcement (at the time of writing). So, my second prediction for 2024 is that we will see much more enforcement from the regulator over Consumer Duty failings.

Unlike last year, I am going to be even more specific in my 2024 predictions – and I’ll be happy to face the music come January 2025 (if Jeff gives me the chance!). I predict that key areas that the regulator will focus on will be:

  1. Systemic unfairness related to particular markets, e.g., high fees, slow and low payments, and restrictive practices (these are more structural and not entirely related to T&C).
  2. Inappropriate and poor levels of customer service.
  3. Customer vulnerability (specifically: what actions firms are taking to identify, monitor and support customer status change over contracted periods).
  4. Evidencing good outcomes.

Let’s look at inappropriate and poor levels of customer service. According to The Institute of Customer Service’s July 2023 UK Customer Satisfaction Index (UKCSI) 2023 saw record low levels of customer satisfaction across all sectors (not just financial services). 5 However, unlike other sectors, good levels of customer service are now enshrined in Consumer Duty regulation. When we speak with firms about making service improvements, they often tell us that training staff on service improvement initiatives can be challenging – especially for frontline employees.

Hybrid working models, for example, make on-the-job learning near non-existent. Increasing levels of ‘need-to-know’ regulatory change also continues to fuel compliance fatigue. In fact, in October 2023, a research report compiled by the Call Centre Management Association (CCMA) – in which 339 interviews were conducted across frontline agents and team leaders/managers – found that escalating compliance requirements – especially within regulated industries – is negatively increasing the cognitive load required of agents, finding that ‘frequent changes in policies and rules have become commonplace’, placing an added burden on training needs and on frontline staff to learn and retain these complex changes to remain compliant in-role whilst meeting increased service demands from customers.6 32% stated that working within the contact centre environment is more difficult than it was 12 months ago. It’s actually that bad that one in three agents surveyed (33%) say they are likely to quit within the next 12 months.

To further compound matters, thanks to the increasing use of self-serve and digitalisation strategies in customer service operations, a far greater percentage of interactions are now – by default – the “more difficult ones” (i.e., the customer cannot or doesn’t want to self-serve) for frontline staff to deal with – especially around key areas such as customer support and complaints; which the FCA have referenced as key elements that need improving in a lot of cases.

Low service standards will prevail until firms recognise that their workplace training strategies have not kept pace with market sophistication and post-Covid operating practices. Firms must invest in practices where employees are genuinely supported, and in-role competence is measured and optimised. Some firms have already acted but most have not, and I predict the regulator will be penning Dear CEO letters regarding customer service outcomes and then acting against firms who are so obviously failing. An example might be where waiting times to speak to an agent are measured in tens of minutes – not seconds – and CSAT is consistently low.

Waiting for customers to complain is too late. In the instance of poor customer service, all the regulator needs to do is pick up the phone and dial your customer services function to know, first-hand, how long wait times are and then how ill-equipped and inappropriately trained your employees are. Interestingly, a recent study commissioned by Microsoft revealed that UK customers are often waiting upwards of 85 minutes to speak to a representative at some of the country’s largest providers of consumer goods and services.7 The study – in which 140 calls were made to large UK organisations across various sectors – looked to shed new insight on current waiting times and potential frustrations that UK customers are facing. Finance and retail organisations were found to be the most likely to state they were experiencing delays due to “circumstances beyond their control”.

Customer vulnerability is also going to form part of the regulator’s 2024 enforcement. It is not good enough that firms have a customer vulnerability policy. This policy needs to stretch far beyond acquiring the customer and far beyond a specialist customer vulnerability team/unit. Every employee who interacts with customers in any way will need to understand the policy and be able to spot vulnerability. Customer status changes over time and firms will need to evidence that they screen their portfolios for vulnerability status change. And, of course, that their policies ensure that vulnerable customers get good outcomes. Firms who have “done some vulnerability training” and ticked the box, will be – forgive the pun – vulnerable, I suspect.

The evidencing of good outcomes is where I have seen a lot of angst and chatter over 2023. Firms are rightly concerned with how they achieve this and many openly admit it is their Consumer Duty Achilles heel. For example, in a webinar we ran in September 2023, we polled 395 financial services professionals and asked them a fairly blunt question: “Do your MI, Board and Committee packs enable you to track the quality of customer outcomes?” 51% of respondents said they either didn’t or didn’t know if they did. Most firms acknowledge the role that genuinely competent employees play in ensuring customers get good outcomes, but I don’t think we will see the regulator enforce against this particular point in 2024. That isn’t to say it’s not important, just that it is probably reasonable to expect firms to need more time to achieve this and – let’s be frank – the FCA will probably have their hands full enforcing points 1, 2 and 3!

Whilst structural failings and systemic unfairness isn’t a function of T&C, it will certainly occupy the regulator during 2024. Primarily because the regulation is not (as some would complain) “ambiguous”. In my opinion, it couldn’t be clearer: put the customer at the centre of everything you do and test everything you do to ensure that products, practices, processes and people all deliver good outcomes for the customer. You don’t need a bunch of highly paid consultants to tell you that delaying customer claim settlements or deliberately underpaying them fails that test. In fact, whilst researching this article I notice the FCA has sent yet another Dear CEO letter to the insurance sector addressing (amongst other things) these very points.

So, in conclusion, what do I think Santa is bringing us for 2024. One word: action. I predict that, given the effort the regulator has put into communicating Consumer Duty requirements and shortfalls with the sector in 2023 – way more than SM&CR – what will follow will be a flurry of action. The regulator has a number of tools at its disposal and 2024 will, in my opinion, be a record year for various types of enforcement activity.

And what about T&C? Well, intrinsic motivation will always trump the extrinsic forces of the regulator. More firms will invest and upgrade their workplace T&C offerings as their desire for authentic, competent in-role employees increases in line with dwindling sources of available talent to recruit and promote. “Great training” was a regular feature of job adverts in the 1980s and I predict it will become so again.

There has never been a better time to be a change agent in the learning and development and T&C space, but – like all things in life – L&D needs to keep pace with rapid changes in the marketplace and society or risk failing their employers, as employees will seek employment elsewhere with firms who understand that workplace learning isn’t a cost centre to be managed down to irrelevance, but rather a source of competitive advantage and authentic regulatory compliance.

Happy New Year!



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Adrian Harvey is CEO at Elephants Don't Forget. Elephants Don’t Forget are world leaders in the use of Artificial Intelligence to augment how each employee learns, retains and evidences in-role knowledge and competency. We support employee competency and compliance training of some the world’s most recognised brands including Microsoft, Vodafone, Experian, Allianz, Old Mutual, Aviva, Eon and Volvo.

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