Fund marketers place a lot of trust in their dashboards to signify engagement. According to the UK regulator, more needs to be done.
To see how firms monitor customer outcomes under the Consumer Duty standard, the FCA took the microscope to 56 firms across sectors, size, and business models. The review examined a range of evidence – from board reports to information requests – and drew insights from a dedicated survey to check three areas:
- Firms’ strategy and framework for the ongoing monitoring of their outcomes
- The use of data, management information, and testing
- Governance, oversight, and culture
The resulting response from the regulator was all too clear. Simply collecting data and producing management reports is not enough on its own to support the idea that customers are experiencing “good” outcomes.
At the same time, what a “good” or “poor” outcome actually looks like across any business’ customer journey is very rarely evidenced at firms, even if they adopt high-level monitoring procedures. They also lack clear thresholds whereby a triggered low metric should be cause for concern.
Elsewhere, operational metrics (conversion rates or completion times for reviews) had weak links with the eventual customer outcomes, while visibility into how different consumer groups may be affected was largely ignored (e.g. vulnerable customers.)
Going forward, UK firms must change. The FCA outlines that they expect businesses to be able to explain what their data informs them, its ability to spot risk, what action to take next, and if this actually improves outcomes in the long run.
So, what does this mean for fund marketers?
There is clearly a chasm to jump for fund marketing, IR and distribution professionals at UK wealth and asset managers: ‘outcomes’ means more than product performance, and encompasses how a fund brand effectively communicates investor value, risk, and cost.
These are all important ingredients when making marketing claims. If a “fair value” or “value-for-money” fund is not clearly backed by defined ‘good vs poor’ thresholds, the FCA will see this as insufficient documentation.
The route now, then, is to coordinate with the compliance team and map whatever claims have been made in investor-facing statements against underlying management information. Then, to be able to demonstrate how any poor readings will trigger a change in a team’s outreach behaviour.
Future FCA supervisory requests will likely take these very findings on board, prompting funds to “show, and not just tell” how their consumer duty metrics are managed to avoid becoming a casualty case study in the next review process.
Source
FCA, “Outcomes monitoring: good practice and areas for improvement”
