New FCA Consumer Duty rules are imminent, but what do these mean for marketing in the later life lending space, and for the use of external lead generation firms?
The hot topic on everybody’s lips in financial services currently is ‘Consumer Duty’. These two words will impact everything financial services companies do and by putting the customer first this will improve marketing practices immeasurably. These changes to regulation are the largest shake up in FCA regulation for years and represents a completely different viewpoint on how to treat customers fairly. From 31st July, not just a good outcome is required, but full consideration on how the consumer has been treated throughout their journey towards financial advice will be needed. From now on, the question ‘are we doing the right thing?’ will need to be asked from the first contact with a financial services product, all the way through to a sale if one is made.
Will ‘Instant quote calculators’ become a thing of the past?
One potentially huge, unexpected casualty of consumer duty could be the instant quote calculator with the FCA’s aim to remove ‘sludge design’ from customer journeys. The FCA have already said in their plan of action for 2022 that they will be focussing on lead generation journeys in more detail and the question will be asked of online calculators that are just designed to capture data, ‘Is this fair for the customer, regardless of whether the outcome was favourable to them?’.
It could be argued if the customer doesn’t feel tricked into giving their contact information over, the enquiry and advice stage will run much more smoothly, with less front-end objections when contacted by a broker.
Essentially, the new regulations will now need lead buyers to evidence how they have performed their due diligence and why they have allowed certain lead generators and landing pages to deliver them enquiries.
Are hotkeys from bought data in the spotlight?
Regardless of whether the customer purchases a product that may benefit them at the end of their journey, the FCA will be focussing on the route to that outcome. This poses the very serious question; is a phone call to survey data to discuss numerous products, treating the consumer fairly? As with much of the consumer duty rules, this will be open to interpretation, but the argument will be based on a very simple thought;
Is a tick box, on an online prize draw really the place leads should be being generated for Equity Release?
Equity Release’s reputational issues.
As is well documented, Equity Release has had its fair share of historical reputational issues, and these still need to be overcome when speaking with potential customers. What consumer duty will attempt to do is ask the question of the lead buyer, ‘have you considered the customer journey and what did you do to ensure it was fair?’.
Reputational issues usually dissipate when a customer receives advice, so we need to look at the customer journey up to that point. The problem lies with all the potential customers who won’t even make an enquiry because the advertising compounds their deep held beliefs that Equity Release is a con. If we can remove misleading or sludge design customer journeys, we start to change minds at the first point of contact, and that will change the market for the better for customers and for brokers, and that’s the real challenge in the years ahead.
How will lead generation change?
Many lead generation firms are already working very hard to prepare for the new consumer duty rules, and Contact State’s partners want to show lead buyers they are being proactive. The first question they will expect from lead buyers moving forward will be ‘How have you considered consumer duty?’
If everyone in the market works together and takes consumer duty seriously, lead generation will become more transparent, and customer friendly. The last thing the Equity Release market needs is to follow in the footsteps of the funeral planning market. The regulatory oversight and onus will be on the lead buyer moving forward, to make sure the customer journey is safe, compliant, and consumer friendly. This means when buying leads, oversight of where the customer enquired and gaining proof of permission to contact them will be more than important than ever. By certificating data transfer, Contact State can help prove that data provenance to give you the confidence to contact your potential customers, knowing they have been treated fairly.