It’s likely to be a bleak winter ahead. Yes, inflation may have hopefully peaked. Interest rates have paused a seemingly relentless climb over the last 18 months. We’re even seeing food and energy costs start to dip slightly. But people across the UK are continuing to struggle as the worst cost of living crisis in a generation rumbles on.

Costs may be slightly lower than they were a few months ago, but the financial cushion many people had built up has been eroded over time. 38% of financially vulnerable people are relying on savings to pay for everyday expenses. For many, there is nothing left, and they face a worrying period ahead as we enter an expensive winter.

Our own Vulnerability Report found nearly half (49%) of people are now more concerned about their financial position than at any point in the past three years. With consumer confidence falling sharply in October as the cost of living continues to weigh heavily on households, 35% of UK adults are now scared for their financial future and 20% will be forced to borrow in the next six months.

Reliance on credit is growing fast, meaning the need for responsible lending products has never been more salient. Consumers need help and one way to support them is to focus on a more outcomes-based approach within the finance industry.

Lighting the regulatory touchpaper – building on the Consumer Duty

Driving a more outcomes-based financial system, of course, is the aim of the FCA’s new Consumer Duty rules, which came into force on 31 July. The regulation covers four outcome areas, involving products and services, price and value, consumer understanding, and consumer support.

Given that winter is now well underway, the Consumer Duty’s effectiveness is pushing financial institutions to support consumers will be put to the test as millions across the UK start switching their heating on. The willingness from financial institutions is there. Our research reveals that more than three-quarters (77%) of lenders view the Consumer Duty rules as simply the first step in a much longer journey to improve consumer outcomes.

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How do we get there?

I see the Consumer Duty ‘champion’ as playing a pivotal role in the shift to a fairer financial model. This must not become a ceremonial role, integrating the individual with this responsibility into the highest level of decision-making across the organisation is vital to drive meaningful change to an outcomes-based financial system with consumers at its heart.

Exactly how prescriptive FCA regulatory guidelines should be is often a personal preference – but one thing that lenders we have spoken with seem unanimous on is the pressing need for the Consumer Duty ‘champion’ to steer decision-making at the C-Suite level.

The need for a cultural shift

However, this responsibility goes beyond simple decision-making. These individuals need to ensure that they’re not just keeping consumers in mind during strategic discussions at board level to adhere to the Consumer Duty, but actually driving a cultural shift across the entire organisation to change its approach.

In short, the guidelines that the Consumer Duty has introduced needs to be firmly integrated into all levels of financial institutions. It needs to become part of an organisation’s purpose.

Positive borrower outcomes bring commercial benefits

This may sound a daunting prospect but this is an opportune time to revolutionise the financial system. After all, with many major financial institutions across both the UK and US have reported increased profits in recent months, the sector has come under renewed pressure to step up its support solutions for struggling customers.

A shift in mindset to a more consumer outcomes-based approach will not only support customers and alleviate some of the pressure on financial services firms to do more in this space – ultimately there’s also a commercial benefit to building long-term partnerships with customers.

Our conversations with leaders across the industry indicate that although many lenders may want to achieve positive borrower outcomes, they believe they lack the capacity or technology to truly prioritise it.

To overcome this challenge, the financial system as a whole is in immediate need of an overhaul to create a fairer, more inclusive model with vulnerable borrowers at its heart. Banks, financial institutions, lenders, and the government, must come together to prioritise good customer outcomes.

Cross-sector collaboration and best-practice sharing is critical to address any gaps in technology or resources that could be hampering change and preventing the emergence of a more outcomes focussed system.

One key part of this includes fintech solutions. At Fuse, for example, we’re helping financial institutions to apply AI-powered algorithms to their transaction and Open Banking data to create deeper customer insights that can inform better borrower outcomes – pinpointing borrower vulnerability at a much earlier stage enabling lenders to provide personalised support.

Transforming the financial system may seem like an ambitious goal but the struggles of millions of consumers is proving that this needs prioritising. Now is the time for industry collaboration and, most importantly, action.

Sho Sugihara is CEO and co-founder, Fuse by Pave