What is the background to assuring good customer outcomes?
Assuring good customer outcomes has been a focus since 2006, when Treating Customers Fairly was introduced. This marked the start of testing for fair customer outcomes in the regulatory landscape. In 2013, guidance on outcome testing was published, helping firms create frameworks to ensure fair treatment for customers. More recently, The Consumer Duty has emphasised the importance of achieving good outcomes for customers. Firms are now required to monitor and report on how they assure these outcomes, guided by the four Consumer Duty Pillars.
By now, you should have identified foreseeable harms and defined what good outcomes look like. Mapping customer journeys and developing metrics and rationales for tolerances are essential steps. Most firms are now moving to the next phase - optimising their approach.
What data is used to measure good customer outcomes?
Data is crucial in measuring customer outcomes. This typically includes complaints, claims, arrears, product switching, and outcomes for different customer groups. These sources offer indicators of how well firms are achieving - or failing to achieve - good customer outcomes. However, further analysis is often needed to gain deeper insights.
Many firms rely on operational outcome testing as a key data source for assuring good customer outcomes. Human-led outcome testing allows firms to investigate issues flagged by other data sources and can be used proactively to sample real-world scenarios. In both cases, outcome testing provides evidence of where good outcomes are being achieved and where they are not, helping to uncover the root causes.
How does outcome testing best fit into operations?
Outcome testing is a key part of customer operations, reviewing interactions and providing insights to the business. However, there are important distinctions to consider. Firstly, outcome testing should go beyond quality control, which typically checks if processes have been followed, without addressing whether processes or policies might be causing issues. Secondly, outcome testing should maintain independence from the three lines of defence, while ensuring strong engagement to address any failings.
What does a robust outcome testing framework look like?
While conducting a single outcome test might seem straightforward, firms need a robust approach to provide meaningful and actionable insights across all areas. An effective framework should include these key components:
- Risk-based testing using a variety of techniques, including end-to-end testing
- A well-designed methodology, ensuring tests have a clear scope and purpose
- Consistent application of a robust methodology for root cause analysis
- Skilled individuals with the knowledge and experience to think critically, assess risk effectively, and focus on what truly matters, with a strong grasp of regulatory requirements
- Effective storytelling and routine reporting to provide insights and highlight areas of concern
- Tools for capturing results in a way that allows for aggregation and analysis
8 key questions firms ask about outcome testing
As with most financial services organisations today, you may be considering how to get the best from your outcome testing framework. To help firms like you we have created a series of videos where our experts explore the key questions that we are often asked when helping clients to optimise the way they test customer outcomes.
To access our full outcome testing video series, submit your details below.
How can we help you with outcome testing?
Our clients have engaged us to benchmark against their outcome testing against industry best practice and provide practical advice on how they can improve. We also help to provide experienced outcome testers, from small teams to increase capacity through to large fully managed teams to help clients investigate areas of concern and provide independent assurance.
To discuss how we can help you with your outcome testing please contact john.turner@bdo.co.uk.
