The Financial Conduct Authority (FCA) has published its final rules on the new Consumer Duty, which are set to come into effect from 31 July 2023 for new and existing products on the market. This follows the release of two consultation papers, where stakeholders were invited to provide feedback for consideration.

Applicable to all UK-based firms providing retail financial services, the Consumer Duty is intended to raise the bar of care that firms are expected to provide throughout the customer journey – this covers everything from providing clear product explanations and suitable advice, to timely complaints-handling and customer service.

The FCA’s definition of a complaint implies that the mechanism for lodging a complaint is extremely wide, covering “any reasonable means”. It does not limit complaints to formal channels like the Ombudsman, and therefore includes informal channels like social media. In its finalised guidance for firms on the Consumer Duty, the regulator has gone so far as to highlight social media comments and complaints as valuable information for firms to collect.

Simply collecting this information, however, is not enough to prove that good outcomes are being delivered. Firms will therefore need to have procedures in place that enable them to identify and address these comments and complaints. But considering the volume of social media conversation that large-scale retail financial providers receive, tracking complaints on these platforms is no easy task to carry out.

We recently partnered with DataEQ – to explore the role of unstructured consumer feedback in next-gen supervisory data.

As part of this work DataEQ, categorised social media conversation and complaints from 15 major UK financial organisations according to the four identified outcomes in the Consumer Duty. The finding was that over half (58%) of actionable consumer conversation included one or more outcomes. This, however, means that 42% of industry conversation was “social noise” and did not include a conduct-related theme, making it difficult for insurers to identify those posts which do. Adding insult to injury, social media conversation is typically riddled with irony, sarcasm, figurative language, slang and localised idiosyncrasies.

As sophisticated as AI has become, the complexity of informal human communication still confounds machines, which means sentiment analysis driven purely by machine learning can often deliver inaccurate results. This raises the question: how will financial firms be able to pick out complaints in an ocean of online conversation?

One solution is to layer an element of human insight over the analytical work performed by machines. In other words, get real people – “a Crowd” – to refine the work done by AI. Human beings are not only better at dealing with sarcasm and local references, they’re also better at performing granular topic-level analysis required for datasets as diverse as financial services complaints.

This may sound complicated, but there are tools being released into the market that do just this. And as the FCA gears towards full implementation of the new Consumer Duty, firms have less than a year to ensure compliance. This includes having the right setup and solutions to effectively manage all possible complaints channels, including social media.

Chris McIlduff, Chief Customer Officer at Davies commented: “We’re entering an era where businesses will be held increasingly accountable for what they deliver to customers and how they deliver it – and social media channels will play an increasing role in this as evidenced by the FCA’s reference to it in its Consumer Duty guidance. What we see in the market, that this analysis highlights, is that customers are sharing complaints that are linked to Consumer Duty in these channels and the response from the market has substantial scope for improvement.

“While some businesses will get this right, many are likely to fail their customers and breach FCA regulations. Our team focus on helping financial services and insurance clients to develop plans and the capability to capture customer insight and ensure it’s being acted upon to deliver the best outcomes and remove the compliance risks of getting it wrong.”

We tested the relevance of social media data in the context of market conduct reporting, categorising social media conversations and complaints about 15 UK insurers according to the four identified outcomes in the Consumer Duty. Download the report.