Head of Medenta Richard Scarborough outlines how the new consumer duty may affect dental practices who offer patient finance and suggests things to consider and prepare.
If you offer patient finance at your practice, then you may already be aware of a new a piece of regulation which comes into effect on 31 July 2023. Consumer duty is being introduced by the Financial Conduct Authority (FCA), which regulates the conduct of firms in the UK.
The FCA’s aim is to ensure our financial markets are honest, competitive and fair. It works to ensure a higher level of consumer protection in retail financial markets.
In 2017, the FCA conducted its first Financial Lives survey. Since then, the survey has been run every two years and is used to inform the work of the FCA. Adults from across the UK are asked about their financial situation, and their needs and experiences with financial services.
The 2020 Financial Lives survey found only 10% of consumers ‘strongly agreed’ that they had confidence in the UK financial services industry. With confidence as low as that, the FCA felt it needed to act to improve trust in the industry. The result is consumer duty.
What does it mean for consumers?
The FCA says: ‘Our new consumer duty sets higher and clearer standards of consumer protection across financial services and requires firms to put their customers’ needs first.’
Consumer duty requires financial services companies to act to deliver good outcomes for their retail customers.
If a practice offers patient finance, they will need to comply with consumer duty. This will mean that practices must consider the impact their products and services have upon their patients. It will give teams greater certainty about how they should treat patients. Also, greater flexibility on how they deliver good customer outcomes.
The consumer duty principle is underpinned by four outcomes:
- Products and services
- Price and value
- Consumer understanding
- Consumer support.
As well as acting to deliver good customer outcomes, practices will need to understand and evidence those outcomes. So, they will be required not only to do the right thing but also to prove they are doing it.
How does this affect practices offering patient finance?
The FCA states: ‘The higher standard of the duty and the shift to focusing on customer outcomes will require a significant change in many firms’ cultures.
‘Firms’ boards and senior management, if they haven’t already, will have to embed a culture in which good outcomes for consumers is central. People management policies and practices, including performance management and pay and bonuses, will be critical to doing so.
‘Firms can expect at every stage of the regulatory lifecycle to be asked to demonstrate how their business model, the actions they have taken and their culture are focused on delivering good customer outcomes.’
It’s a good idea to put yourself in the position of a patient. Test every part of their journey through the finance process to uncover any stumbling blocks.
Ask yourself: ‘Am I treating my patients the way I would want to be treated?’ or ‘are my patients getting the outcomes from my finance products and services that I would expect?’ Are staff remuneration policies (particularly for TCOs) incentivising good customer outcomes?
Dental practices shouldn’t have such a large cultural shift to make. The GDC already expects dental teams to put patients’ interests first and practices are used to outcome-based regulation.
However, the new consumer duty will require many practices to take a slightly different approach to patient finance. It will require them to adopt the same level regulatory mindset they take with the other aspects of their business.
Products and services
Making sure the needs of all your customers are being served is central to the new legislation. Vulnerable customers are mentioned more than 100 times in the legislation, so ensuring you cater for them too is essential.
The FCA defines a ‘vulnerable customer’ as ‘someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care’.
Price and value
If you’re offering finance, then you are required to provide value for money. You’ll need to review the costs of the finance options you offer to ensure good outcomes for your patients.
This will include making sure you offer the best options for the patient first, such as interest free before interest bearing credit.
The way you communicate with your patients needs to be reviewed to ensure they understand the services they are buying.
You also need to consider whether the channels of communication are suitable for vulnerable patients too. Is your website accessible for someone with dyslexia, for example?
Are your phone systems, menus or webchats easy to navigate? Can patients easily find key information they may need on your website? Do you make sure patients know where they can get help with their finance product?
Is your complaints procedure easy for patients to find and navigate and does it incorporate all necessary elements to meet FCA requirement? Is as much care put in to looking after patients after they have signed up for finance as there is pre-sale?
These questions need to be considered when assessing whether your patients receive adequate support with their finance product.
If you’d like more information about consumer duty and how to prepare for the new regulations, the FCA website has guides and some helpful suggestions as to the type of questions you should be asking yourself as you complete your preparation. For Medenta clients we have produced an e-learning module.