The partnership will see MorganAsh using Moneyhub’s Open Banking and Open Finance platform to access customers' financial data with their explicit consent to assist with the real-time assessment and monitoring of consumer vulnerability. It will be included within MARS, the MorganAsh Resilience System and will help determine a customer’s ‘Resilience Rating’ – much like a credit score.
Gained through customer's explicit consent, the newly accessible data will help highlight changes in behaviour and specific lifestyle indicators such as gambling or changes in employment, which can all be triggers for intervention by financial services firms. Real-time monitoring of income, expenditure, assets, and liabilities can alert firms to changes in circumstances and identify vulnerable characteristics.
MorganAsh launched its MARS broker tool in March 2022 to enable firms to assess and monitor consumer vulnerability and stay compliant with the Financial Conduct Authority’s (FCA) upcoming Consumer Duty regulation.
While the MARS tool can capture any direct contact from consumers and the MorganAsh can email consumers for annual updates, the potential to receive real-time data from Moneyhub will enable real-time monitoring so MorganAsh can contact consumers when their circumstances and needs change.
The FCA finalised requirements on Consumer Duty in July 2022 with implementation for open products by July 2023. It requires financial services firms to act in good faith, avoid causing foreseeable harm and enable and support customers to pursue their financial objectives.
This means firms need to urgently reappraise how they identify, assess, and monitor the vulnerability of consumers throughout the product and relationship lifecycle.
As 50% of consumers are potentially vulnerable, and consumers can become vulnerable at any time, there is a challenge for financial firms to understand the needs, characteristics, and behaviours of vulnerable customers. While some companies are using individual assessments, the reporting from this approach is inconsistent and does not provide consistent data to meet Consumer Duty requirements. There is the need to have solid, consistent, timely, and regular data.
The availability of data also brings benefits to providers. These include lower customer acquisition costs through data analytics; lower onboarding costs with automated and comprehensive fact finds; data-based suitability and capacity for loss checks and ongoing checks for changes in circumstances and progression towards intended financial outcomes. Increased revenue, lower costs and a compliance dividend.
Open Finance has the potential to be a crucial enabler of increased competition and innovation in financial services and improve consumer choice and financial capability. But in achieving these benefits, it will also inevitably disrupt traditional financial market structures and business and revenue models.
The UK plans to mandate Open Finance by law in the same way that the second Payment Services Directive and the CMA 2017 Retail Banking Order mandated Open Banking. Account Service Providers (ASPs) – or data holders – will likely be required to put in place and maintain secure Application Programming Interfaces (APIs) to share data with TPPs – or data receivers – at the customer's request.
The FCA expects that TPPs will need regulatory authorisation to operate.The FCA and the UK Government have committed to introducing a legislative and regulatory framework to mandate and oversee Open Finance and clarify which types of entities, accounts, and datasets would be in scope. The initial proposals for such a framework are expected to emerge in late 2022 or early 2023. This will pave the way for a phased Open Finance implementation in late 2023 or 2024, likely starting from use cases with the best cost/benefits balance.
To find out more about Moneyhub, check their profile in our company database.
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