Pensions, Wealth and the Consumer Duty

In this blog post we take a look at how the Wealth and Pensions Industries can unlock the Consumer Duty golden opportunity with Open Banking and Open Finance.

“9.7 million British adults who have £10k or more investable assets hold the majority (75%+) or all in cash”.  Theresa Chambers. FCA Director of Consumer Investments. November 2022

Complicated and intimidating 

Pensions and Wealth firms face a challenge. On the one hand, billions of pounds of consumers’ money has the potential to be invested in long term savings. On the other hand, according to the FCA’s Director of Consumer Investments, consumers are confronted with a multitude of complicated products which means it’s more intimidating than ever for consumers to make decisions about their finances. 

A win:win for Wealth and Pensions?  

At Moneyhub we believe it’s possible for firms to unlock this long-term savings opportunity AND comply with the Consumer Duty. How? The FCA provides a clue about the application of Consumer Duty to investments when laying out its priorities for the financial advice industry. It said:

“We need to move on from one-size-fits all models to models which are genuinely designed to meet the needs of customers and which recognise that not all customers have the same needs”

Consequently, the Consumer Duty creates a number of challenges for Wealth and Pensions firms: 

  • The Products & Services Outcome: Suitability - it is not enough simply to say that your customer has a high tolerance to risk

  • The Price & Value Outcome:  Product and Distribution strategies - do charges reflect factors like different service levels and the underlying costs to advice firms?

  • The Consumer Understanding Outcome: Disclosures that are over-lengthy, over-complex and fundamentally unclear

  • The Consumer Support Outcome: Where advisers have committed to providing ongoing services to their consumers, these should be delivered and delivered well

Data powered solutions - it’s all about the ‘ilities’

Pensions and Wealth firms can benefit from the Consumer Duty by embedding Open Banking and Open Finance in their response. Moneyhub’s Open Data platform provides you with access to your customers’ aggregated, categorised transaction data to power processes and dashboards that identify the ‘ilities’: suitability, eligibility, vulnerability & capability or affordability. 

The same data can help firms understand their customers’ needs, characteristics and behaviours and when combined with our Personal Financial Manager, it can identify real time changes in consumers’ lives, such as a change in circumstances or inability to bear loss at both a market and individual levels.  

Combine that with the ability to notify, inform and influence consumers with nudges, at the right time and with context, and one can see why Open Banking and Open Finance data should be central to firms’ compliance with the Consumer Duty.

Reduce risk, increase automation, grow sales:

Transaction data powers numerous Consumer Duty compliant use cases for Wealth and Pensions firms: 

  • Accurate, comprehensive, lower cost fact-finding 

  • Efficient digital onboarding, including source of wealth/funds

  • Gap analysis and both initial and ongoing suitability checks including changes in capacity for loss

  • Highly personalised customer experiences support customer communication and retention, such as pension wake-up, product anniversary or maturity communications

  • Improve decision making by providing a holistic picture, for example, small pension pots may be considered trivial but when viewed in aggregate (and, potentially, consolidated) the importance and value for retirement planning is more obvious

  • Lower cost and frictionless open banking payments enable automated ‘sweeping’ of money from a bank account to savings and investments

From product outcomes to customer outcomes

Many firms claim to have millions of customers when in reality they’ve just sold a lot of products. In a complex, competitive, confusing world Moneyhub helps turn transactional buyers into loyal, engaged customers. When clarity and confidence about what your customers really need and want is in short supply, Moneyhub gives you the tools you need to comply with the Consumer Duty AND deepen relationships with customers, increase share of wallet and grow your business.