The FCA’s proposal seeks to improve the standard of care that retail financial firms provide to their customers and would require them to prioritise consumer outcomes. Moneyhub has submitted a response to the FCA’s consultation pointing to Open Finance as an effective tool in achieving better financial outcomes for consumers and as a solution for retail financial firms to comply with the new rules.

Moneyhub has called for a requirement for financial institutions to make customer data more readily available through the adoption of Open Data standards. Providers across sectors such as life and pensions, wealth management and general insurance, have the ability to provide secure and easy access to customer records. However, the Smart Data Initiative has identified that slow digital transformation has resulted in this having limited the benefits to consumers and the economy.

Moneyhub believes that the development of Open Finance will have a positive and supportive impact upon better financial outcomes for consumers. At the same time, Open Finance will enable financial businesses to better understand, monitor and act upon the FCA’s Consumer Duty Structure - the main principle; the underlying cross-cutting rules and the four key outcomes. There are already practical examples of where this is the case - not only at the point of purchase but also on an ongoing basis. These include:

Understanding customer needs - including vulnerable customers - by aggregating data and helping customers to better understand and control their current finances, allowing for more informed decisions that impact longer-term outcomes
Pension planning - whilst a small pension pot may be viewed as trivial in isolation, when seen alongside other pots and aggregated, a consumer may be less likely to encash it
Suitability checks - fact finds tend to show a snapshot of a customer’s financial situation but Open Finance data can highlight the historic volatility of income and expenditure giving a different picture of product suitability. This will include the detection of changes in circumstances; patterns of saving and income; reduced capacity for loss and potential scams or other forms of detriment
Value for money - accessing comparable charges and fees via data aggregation will enable the customer to form a view on the benefits of switching product or provider, consolidating plans or seeking alternatives

Sam Seaton, CEO at Moneyhub comments: “At a time when everyone’s finances will be feeling the squeeze, it’s vital that consumers are able to make informed decisions about their money. However, this is only possible when they have access to all the information. Greater data-sharing from the industry will not only benefit consumers, but the organisations themselves too. By being able to create personalised products and services, firms will be building a loyal customer base.

“Open Banking created a revolution, but we now need to go several steps further. Some financial institutions have been slow on the uptake of Open Data and they risk falling behind their peers. At Moneyhub we work with a number of organisations helping them to turn data into personalised digital experiences that improve customer outcomes. The FCA’s proposals on Consumer Duty are important for the industry, and Open Finance has a significant part to play.”