Samuel Riordan, Executive Director of banking & payments at consultancy Capco, comments on the FCA’s intentions to launch a Motor Finance redress scheme;
“It is odds on that the FCA will shortly launch a consultation on a Motor Finance customer redress scheme – and there are some key actions that firms can take right now to ensure they are ready.
“If introduced, a redress scheme would provide a simpler system for complaints and reduce reliance on costly claims management companies. It would also bring benefits for firms, introducing a structured and efficient process for complaint handling and offering an opportunity for providers to enhance their approach to customer analysis, complaint management and customer communications, leading to better customer outcomes overall.
“That said, preparing for a redress scheme will not be plain sailing. In addition to likely causing a spike in operational demands in response to the simpler complaints process, it also brings complexities for firms to mobilise and prepare as they look to comply with the regulator-mandated rules surrounding the scheme.
“While the scheme is yet to be confirmed, firms should view this week’s announcement as an impetus to continue preparations for a redress scheme now to avoid falling short later. A key focus initially should be improving their data quality and data assets to develop their underlying claims management data set; building intelligent models that can compute redress; the management of inbound communications across multiple forms; and as a final step preparing redress operationalisation through ramp up of resources and operational processes.
“Aside from these measures, firms should also consider deploying intelligent technologies to support with redress operationalisation. Such technologies allow providers to reduce operational costs and optimise the customer experience for fair and efficient outcomes. For example, this could include the use of chatbots to capture initial customer complaints, data analytics to size the impacted population and redress amounts through to the use of generative AI and deployment of AI agents to review submitted cases and conclude customer outcomes.
“Further steps could include call transcription, sentiment analysis and vulnerability identification to enable superior customer outcomes and significant operational efficiencies reducing the traditional human resource burden in scaling these sorts of programmes.
“Firms must use this time to think and act strategically. Embracing advanced technologies will both enable providers to manage heightened operational demands and ensure better customer experiences and outcomes, ultimately reducing the resource burden and broader impact to the financial services sector.”
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