Executive View: Reflecting on Consumer Duty’s first year

Natasha Foley discusses how Consumer Duty served as a catalyst to reflect on BMW Group Financial Services' operational approach and helped it create a more holistic business.

If you work in a Financial Conduct Authority-regulated business, I doubt that 31 July 2023 is a date you will forget in a hurry.

The introduction of Consumer Duty last summer was arguably one of the biggest regulatory shake-ups in personal lending history. Alphera Financial Services, its parent organisation BMW Group Financial Services, and countless other businesses across the UK spent the weeks and months before the 31st planning and preparing for its implementation.

At BMW Group Financial Services, my responsibility has been to coordinate the successful deployment of Consumer Duty across our brands. It’s a role I’m still proud to hold, as we continue to refine our processes and support our dealer partners with advice, guidance and updated resources.

Mapping our approach

No two businesses are quite the same; within the vehicle finance and lending sector, there is a myriad of different specialities and operational structures.

A major element of our preparatory process looked at how the Consumer Duty specification impacted each organisational area within our brands. By utilising gap analysis, we understood what we already did to meet Consumer Duty, what elements needed to be introduced, and the areas that would need to be enhanced to meet the requirements.

One of the key outcomes from this process was the creation of documents that support our dealer partners with understanding the target market for each of our finance products. We shared these with our partners and worked with them so that we could be confident that they’re always offering the most relevant solution to every customer.

Consistency is key

Although policy has been key to meeting the requirements of Consumer Duty, without a solid understanding of the standard by both our staff and dealer partners, drivers financing their next car wouldn’t receive a consistent, compliant level of service.

To help solve this issue, we gave staff, dealers and brokers the information they needed to thrive by investing in training and partner development programmes. We found that a mix of communication approaches allowed us to engage with stakeholders of all disciplines and seniorities.

Alphera Financial Services established a web-based hub with advice, guidance and documentation on Consumer Duty. Our teams also distributed frequent bulletins that introduced new information and reaffirmed previously communicated topics.

At our Farnborough campus, we made our internal training sessions as varied and accessible as possible, including activities such as virtual coffee-mornings. At these events, we supported colleagues in understanding the expectations of the Duty and how this affected their own roles. This further embedded other ongoing training including online modules, bulletins, business briefings and video resources.

Our field managers expertly ran roadshow workshops with dealer partners up and down the country. These activities allowed us to ensure that customer documentation was correct, staff felt confident in what was expected of them, and online sales and marketing platforms also reflected the changes.

Continuing the legacy

Naturally, a change in regulations as sizeable as Consumer Duty did pose some challenges. The most complex of which was to educate every stakeholder on our approach. But we have seen the benefits of its implementation.

For Alphera and the BMW Financial Services divisions, the customer is firmly at the centre of everything that we do. Every decision we make, at all levels of the business, is grounded in how it affects the customer. Consumer Duty served as a catalyst to reflect on our operational approach. It helped us to create a more holistic business by restructuring our committees and customer governance processes.

Our commitment to the spirit in which Consumer Duty was created is proven by the fact that we still maintain a task force focused on its application. We still have an active email inbox to address queries and concerns from our partners, and we have a compliance and monitoring team to make sure that our policies are adopted and consistently used with customers.

Our partners have told us that they not only appreciated our help and support before Consumer Duty was implemented but also in the weeks and months that followed.

But we’re not resting on our laurels. The automotive sector doesn’t stand still, and neither do we. There’s always more we can do to support customers. Our mission is to put the customer first and make car finance as approachable as possible to car buyers.

Natasha Foley is project lead, Consumer Duty, BMW Group Financial Services