National Insurance Hike: Read our update
6 minutes
Introducing some eminently sensible guidance from the Financial Conduct Authority.
You know those moments when a new initiative comes up and you can't believe no-one thought to do it before? We had one of those this summer when the FCA introduced Consumer Duty.
Put simply, it means that companies selling financial products need to have a high standard of care towards their customers. It’s been introduced by the Financial Conduct Authority (FCA), which regulates the activities of financial companies in the interest of consumers.
As the FCA put it themselves ‘consumer duty’ means “consumers should receive communications they can understand, products and services that meet their needs and offer fair value, and they get the customer support they need, when they need it.”
To us this just seems like common sense and speaks directly to our mission of helping everyone adopt healthy saving habits to feel good today about life tomorrow.
Our founders started Penfold because they had experienced the difficulty of engaging with pensions as savers, as self-employed workers and as employers who had to set up pension schemes for employees.
At the time Penfold was launched in 2018, old-school pension companies were providing a terrible digital experience and customer service was difficult to engage with and jargon-filled. The end result was that people were being off from engaging with saving for their future.
Our founders knew that pensions could be better than they were and that technology offered a way to do that. They also wanted to communicate with people in a way they would understand, demystifying some of the more complex aspects of pensions whenever possible. This was crucial if people were to have enough money for comfortable retirements when they stopped working.
But let’s return to the FCA’s definition of consumer duty, taking the three key aspects of their guidance one at a time.
Whether people engage with us through our website, via social media or regular communications (e.g. emails) we always try to make sure our messaging is clear and easy to understand. We’re constantly on guard against jargon. We know that if people don’t understand us, they’ll switch off, which has serious ramifications for saving enough for later life.
As an aside, this is helped through our recruitment. There is always some aspect of pensions that new Penfold staff are confused by and we have internal channels for people to ask questions, no matter how seemingly simple. At Penfold we have instilled a culture that encourages simplicity of communication.
Historically pensions have not been that good. Up until fairly recently, knowing how much you had saved meant waiting for your annual statement to arrive through the letterbox. Whatever that amount was, it didn’t mean anything in terms of how much you might have for the weekly shop or an annual holiday once you’d stopped working.
Waiting for that statement to arrive was the only time in a year people might consider how much their money had grown by or if the fund their money was in was performing well. People couldn’t get excited about the money their employer is putting into their pension (money they are getting on top of their salary) because they wouldn’t see it.
Just 57% of people regularly check their payslip and most of those generally just for the bottom line – the amount that is going into their bank account. People notice when they think their tax code is wrong or if they can’t access their payslip, but hardly ever query their pension payments.
Penfold works hard to offer a product and service that meets the needs of people and offers fair value. Whether it’s logging in online or through their app, customers can check the current value of their pension pot and see how their investment is performing. They can see what their money is invested in and see the track record of their investment since inception.
The point of all this is providing information that means something to people. We think it meets people’s needs when it comes to a pension.
Our customers can also decide for themselves if we offer fair value because we publish comparison tables. We are transparent about our singular management fee and we don’t have extra charges because we believe it’s confusing.
Legacy pension providers are catching up and making their products fit for modern life, but there are still quite a few that (for example) don’t offer an app when 88% of the UK population owns a smartphone.
Everyone has tried to contact a service provider at some point in their life, so we all know what a bad experience looks like.
Nobody wants to wait on the phone for ages listening to muzak that is occasionally interrupted by a recorded message telling you either that you’re (still) 18th in the queue or that the phone lines are busier than usual right now and that you might find the answer to your question on the website (but not where you might find it).
If you call Penfold and all our advisors are busy helping other people, you don’t have to queue. You’ll hear a message asking if you’d like to leave a message and your number is logged so we can call you back.
Penfold is a growing company with around 50,000 customers at the time of writing and to some extent we’ve been a victim of our own success. It’s fair to say that we’ve grown faster than we expected. That has brought challenges in terms of customer service that we are meeting.
We use software to monitor reviews on platforms like TrustPilot that let us know what we are doing well and where we can improve. Modern technology is also helping.
In the 12 week period leading up to the publication of this article (the third quarter of 2023), our chatbot was able to direct around a third of queries (32.3%) to the information on our website that users were looking for. Where it couldn’t, our customer service team took over.
During the same period, nearly 14,500 queries were responded to by humans with average satisfaction ratings of 85%. Where users left messages with the chatbot, their queries were addressed within 90 minutes on average.
We’re really happy to see the FCA’s Consumer Duty has stressed the importance of customer experience. As we stated at the top of this article, it was one of the reasons our founders thought they could provide a better pension experience.
If you've been reading this and wishing your pension provider offered the kind of service we do, it's simple to switch.
Murray Humphrey
Penfold