As the world of financial services becomes increasingly intricate, so too does the maze of regulations we need to navigate. The introduction of the principle-based Consumer Duty by the Financial Conduct Authority (FCA) is a classic example. It sets higher standards for how we interact with consumers but also leaves many of us scratching our heads over how exactly to interpret and implement these standards effectively

🕵️This growing complexity means we really need to rethink how we handle customer service, especially when it comes to identifying and supporting vulnerable customers.

🤔Vulnerabilities can be revealed in various ways by customers. For example, when a customer mentions that English isn’t their first language, it triggers questions about their understanding of complex information. Depending on their level of English, we might need to step up with additional support. It's down to us—both advisors and the wider firm—to judge whether this extra help is needed. And now, under the new Consumer Duty, providing this support isn't just good customer service; it's a regulatory must.

📝At Koodoo's mortgage brokerage, identifying vulnerable customers is a priority. The changes needed to comply with these new regulatory demands have been substantial for many firms, including ours. The principle-based nature of Consumer Duty makes it tough to pin down clear-cut rules and procedures for handling every aspect of consumer vulnerability. As a result, there's been an increase in administrative tasks that need regular reviewing and updating, draining both time and resources.

In this challenging environment, Generative AI, or GenAI, steps into the spotlight. It offers us innovative tools that could dramatically ease the burden, bridging the gap between tough regulatory requirements and our day-to-day operational needs.

A new framework for compliance monitoring

My vision for a practical, improved framework for compliance monitoring in 2024 leverages AI technologies to assist advisors throughout the advisory process.

By utilising AI, the system transcribes communications in real time and instantly identifies any issues or gaps. Advisors can immediately address these issues with a “one more thing” call to the customer rather than a follow-up weeks later, which minimises costs and enhances the customer experience. After each interaction, advisors and managers receive feedback within minutes, allowing for swift and effective corrections or follow-ups. 

What are the differences between the traditional and new advisory processes?

✅A two-step compliance monitoring process:

• Initial AI Review: AI systems transcribe and analyse all customer communications, applying specific evaluation rules to perform initial checks on 100% of conversations.

• Human Review for High-Risk Areas: High-risk areas flagged by the AI are then escalated for a detailed secondary review by human personnel, ensuring precise oversight where needed.

⏱️Drastically saving time required:

• Elapsed time: Compliance checks are done instantly with conversations, and advisors and managers receive instant feedback, rather than waiting for weeks before the compliance team responds.

• Review time: AI systems check and summarise conversations thoroughly, so the compliance team only has to review flagged rules instead of listening to the entire conversation and checking each rule, drastically reducing human process time.

🗃️Cover ALL of your calls, not just a small sample size:

• With AI automation, all calls can be effectively and economically monitored and checked, providing clear commitment evidence in performing consumer duty.

Explore with Koodoo

Advancements in GenAI and other relevant technologies have enabled the possibility of automating the compliance monitoring process, which is a major focus at Koodoo. With tailored AI models that understand the nuances of calls in financial services, we are able to transcribe and monitor conversations against pre-designed compliance rules.

At Koodoo, we are eager to push the boundaries and lead the financial services industry into the future with innovative AI solutions. Get in touch and let's shape the future together.

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