How Voice of Customer (VoC) Programs Revolutionize Compliance in Financial Services
The Australian financial services industry operates in a tightly regulated environment, with a myriad of compliance obligations that must be met. In recent years, the implementation of a Voice of Customer (VoC) program has emerged as an essential tool for reducing compliance risk, improving customer experiences, and addressing several regulatory requirements. Explore the ways in which VoC initiatives can assist financial services in ensuring compliance with regulatory obligations like RG 271 and DDO, and learn effective strategies for navigating these requirements.
RG 271—Closing the Inner and Outer Loop
One of the critical regulatory guidelines that financial firms must adhere to is Regulatory Guide 271 (RG 271), introduced by ASIC following the Royal Commission in 2021. RG 271 specifies that financial firms, including AFSLs, must have a fully functional internal dispute resolution (IDR) system in place. This system must acknowledge and record all complaints, respond to complaints within specified time frames, and include required information in responses.
A VoC program, along with closed-loop feedback activities, plays a pivotal role in meeting the obligations under RG 271. By capturing unsolicited feedback, identifying dissatisfaction, and closing the loop with unhappy customers, businesses can fulfill the requirements of an IDR system. Furthermore, VoC programs can help identify systemic themes behind recurring customer feedback, known as the “outer loop.” This deeper understanding allows firms to address underlying issues and communicate solutions back to customers.
Although survey responses are excluded from RG 271, many compliance teams find that providing an additional channel for member feedback supports overall compliance efforts.
Design and Distribution Obligations—Focusing On Customer Needs, Transparency, and Ongoing Monitoring
Design and Distribution Obligations (DDO) are another set of regulatory requirements aimed at ensuring that financial products are designed and distributed in a manner that aligns with the best interests of customers. This includes designing products consistent with customer objectives, financial situations, and needs, as well as monitoring customer outcomes to ensure product alignment.
VoC programs enhance the effectiveness of DDO implementation by focusing on customer needs, transparency, and ongoing monitoring. By involving customer experience experts in the product design process, financial institutions can align products with customer expectations, ultimately improving satisfaction. Additionally, robust feedback mechanisms allow customers to provide input on their experiences, helping firms identify issues and make necessary improvements to product design and distribution.
Best Interests—Gain Insights Into Member Preferences, Needs, and Expectations
Legislation within financial services mandates that advice and decisions be made in the best interests of consumers. To deliver on this covenant, financial services firms must gain insights into member preferences, needs, and expectations. VoC programs come to the rescue by capturing both solicited and unsolicited feedback from members and employer surveys at critical touchpoints in their journey. This information allows trustees to tailor fund offerings, investment options, and services to align with member values, ensuring that fund decisions and actions are in line with beneficiary interests.
Complaint Reduction—Reduce Business Costs While Reducing Complaints
VoC programs also play a pivotal role in reducing the number of industry complaints, ultimately cutting costs across the business. Here’s how:
- Proactive Issue Rectification: VoC programs help organizations proactively address negative feedback early, preventing issues from escalating and ensuring customer satisfaction.
- Root Cause Analysis: By providing insights into the underlying causes of complaints, VoC programs enable firms to address root issues rather than just symptoms.
- Customer-Centric Improvements: Insights from VoC guide firms in making customer-centric improvements, preventing issues from arising in the first place.
- Employee Training and Engagement: VoC programs help identify areas where employees may need additional training or support, leading to better-equipped employees and reduced customer complaints.
In summary, VoC programs are driving decision-making in technology within financial services firms. They address regulatory obligations, enhance customer experiences, minimize compliance risks, reduce costs, and strengthen customer relationships. Embracing VoC is not just about compliance; it’s about building a customer-centric financial services industry that benefits everyone involved.
