The Financial Conduct Authority (FCA) has proposed a sweeping range of new regulations for claims management companies (CMCs), including a number of rules surrounding the recording and storage of calls with customers. We sit down with Mark Braddock, COO at Recordsure, to learn more about the changes being put forward, why they come as no surprise and how firms can seize the initiative in the changing landscape.
What are the proposed changes?
There are a host of new rules that have been proposed, which range from providing potential customers with a short summary document containing important information through to greater transparency around “no-win, no-fee” services. A full list of the changes can be found on the FCA website, but the area that caught our eye was the singling out of phone conversations as a source of potential harm within the market and therefore in need of intervention to improve transparency.
There are two key components being proposed here:
- CMCs will need to record all calls they have with customers
- They will need to store these audio files for a minimum of 12 months
This is intended to help reduce the amount of nuisance calls such as cold calling and potentially aggressive sales techniques. The FCA is also proposing that CMCs will need to keep a record of electronic communications like emails and text messages in conjunction with this.
Why are these new regulations being planned?
The FCA is due to become the regulator of CMCs on 1 April 2019 and has been considering ways to safeguard consumers, with phone conversations surfacing as one of the key areas in need of more structure:
“A large proportion of CMCs’ business is conducted by telephone and this is where much of the harm in the market occurs, such as poor service or misleading or aggressive marketing.”
The focus on telephony comes as no surprise: the FCA have been vocal about the importance of accurate and comprehensive data, and these changes would bring CMCs in line with other sectors in the FCA’s jurisdiction.
How do firms need to prepare?
As a minimum, the infrastructure needs to be put in place to record and securely store customer phone conversations, which includes both the technical implementation and process planning / training if these practices are not already present.
Firms will also need to consider the way their audio data is structured. When called to review recordings, evidencing that you have been compliant can be a project in itself with data analysts needing to sift through a high quantity of audio files. Recordsure had a recent case where our AI technology was used to automate elements of this process enabling analysts to audit the audio files 60% more efficiently than through traditional methods. The workload around an audit can be substantial: it pays to plan in advance and make sure the architecture of your audio data is well structured.
How can CMCs embrace these changes and harness them to strengthen business?
Whilst some firms may view these regulations with trepidation, there are genuine opportunities to exploit for forward thinking organisations. If processes and infrastructure need to be reviewed, it can provide a good chance to incorporate wider changes that strengthen business.
For example, Recordsure software helps improve the sales cycle by highlighting the points in conversations which are well received or where engagement tails off, which gives powerful insights that can guide messaging and maximise conversions. It can also be used to help identify potentially vulnerable customers, which is very much in line with the FCA’s focus on consumer welfare as well as a positive brand differentiator in a competitive market.
The proposed changes are focused on phone calls but it is also worth considering whether it would be valuable to go one step further and apply similar procedures to face-to-face conversations. Although this is not currently part of the proposed changes, it does seem consistent with the FCA’s wider ethos and could help future proof businesses, whilst also extending the benefits of voice analytics insights and a robust audit trail through another channel.
History often shows us that the most successful companies are the ones that embrace change rather than standing still, and the FCA’s proposals should be viewed as an opportunity for CMCs likely to be affected when the changes come into place.
Recordsure uses advanced artificial intelligence technology to help businesses unlock the power of their customer interactions in order to drive efficiencies, increase sales and enhance customer care on an unprecedented level. Get in touch if you would be interested in learning more about these innovative solutions.