How Consumer Duty is Putting the Customer Back in the Driving Seat
The Financial Conduct Authority’s (FCA) ‘Consumer Duty’ regulations landed with a ‘thud’ on the desk of many research and customer teams last year - and along with it came no shortage of changes and improvements for companies to make to ensure that their financial products and customer messaging is compliant with FCA standards.
However, for many of our clients and industry partners in financial services, the introduction of Consumer Duty is proving to be more than just another compliance exercise - with the new standards driving a significant shift in how financial services companies are thinking about consumer protections, customer experience (CX) and the relationships they have with their customers.
This is why at Maru we have adapted our CX programmes to ensure that our clients are able to assess not just customer experience, but also whether communications offer appropriate support, fair value to consumers, and clear information. This is reflected in our ‘Check’ and ‘Check+’ Consumer Duty communications testing tool, which allow users to case test communications for these criteria via a survey of pre-profiled consumers, including vulnerable consumers, against the FCA standards.
However, it’s not just about compliance. While it is certainly true that Consumer Duty adds more complexity to financial products and services, it is also proving to be a catalyst for a much bigger rethink on customer feedback. For many of our clients, Consumer Duty has meant a new and welcome emphasis on better understanding and improving customer interactions, leading to more customer-centric product and service designs - and benefits such as better relationships with their customers and improved brand loyalty and advocacy.
Achieving a better understanding of customer feedback is crucial not just to implementing Consumer Duty effectively - but also in creating multi-channel experiences and designing products that meet real needs. In today's digital landscape, where competition is fierce and customer expectations are high, understanding what customers value most offers a competitive advantage when it comes to product and service design, identifying and overcoming consumer pain points, and building better long-term relationships with customers. In response, we’ve adapted our CX programmes to address this need and built our ‘Check’ and ‘Check+’ Consumer Duty tool (see more information on this below).
What is Consumer Duty?
Consumer Duty is a new regulatory standard from the Financial Conduct Authority (FCA) that was officially introduced and enforced from July 2023. It aims to enhance consumer protection within the financial services sector by establishing a new Consumer Principle. This principle requires firms to act to deliver good outcomes for retail customers.
The impetus for Consumer Duty arose from a need to address gaps in consumer protection, particularly as financial products and services grow increasingly complex. In a nutshell, the regulation mandates that companies provide clear, accessible information, ensure that products and services are suited to the customers' needs, and deliver fair value. Firms must also recognise and accommodate customers in vulnerable situations, offering them the same level of understanding and support as any other customer.
For businesses, this means a comprehensive review of their product offerings and customer journeys is necessary. The regulation covers all companies that offer financial services, not just those traditionally associated with finance. This breadth of application underscores the importance of embedding a customer-first mindset across various business functions, from marketing to service delivery. To support businesses in meeting this challenge, we’ve built our Check’ and ‘Check+’ Consumer Duty communications testing tool, which allow users to case test communications for these criteria via a survey of pre-profiled consumers, including vulnerable consumers, against the FCA standards (see more information on this below).
What Does Consumer Duty Mean for Finance Brands in the UK?
Consumer Duty mandates several responsibilities for brands operating within the UK financial services sector. The focus is on delivering outcomes that are not only compliant with the FCA's guidelines but also genuinely beneficial to the consumer. The FCA has published many specific guidelines and principles that brands must meet, however they can be summarised as ensuring that:
Customer Support is Accessible and Helpful: It should be as straightforward to resolve issues, switch services, or cancel a product as it was to purchase it. This entails streamlining customer service processes and ensuring staff are equipped to handle a variety of inquiries efficiently.
Information is Timely and Clear: Consumers need access to concise, relevant information to make informed financial decisions. This means eliminating unnecessary jargon and ensuring that key details are not hidden within lengthy terms and conditions.
Products and Services Fit the Customer's Needs: Companies must refrain from pushing unnecessary products on customers and instead focus on offerings that align with their financial situation and goals.
Fair Value is Provided: Customers should receive a fair price for services, with no hidden costs or unjustified fees. While this doesn't mean guaranteeing the best deal for the consumer, it does promote transparency and trust.
Consideration for Vulnerable Customers: Firms must take into account the unique challenges faced by vulnerable customers, such as those with poor health or financial difficulties.
Failure to adhere to these requirements can lead to serious consequences, which in some cases may include FCA interventions or investigations and possible disciplinary actions. Therefore, it is important that businesses take proactive steps to align their operations with these new standards. In support of this, we’ve built our Check’ and ‘Check+’ Consumer Duty communications testing tool which empowers businesses to case test communications for these criteria via a survey of pre-profiled consumers, including vulnerable consumers, against the FCA standards (see more information on this below).
How Consumer Duty is Putting the Customer Back into CX
For many clients and industry partners, Consumer Duty is proving to be both a significant compliance hurdle and a catalyst for a pivotal shift in thinking, putting customers at the heart of things like product design, communications, and even business operations.
First and foremost, Consumer Duty is presenting practical compliance challenges for companies, ensuring that all existing and planned customer communications about financial products meet all of the FCA’s new requirements - such as ensuring clear communications, value for money, and protecting vulnerable consumers. Following the introduction of Consumer Duty in the latter part of 2023, it quickly became clear that issues such as subjectivity present a significant challenge for brands too. For example, while the FCA has been specific in some areas, it is not always immediately clear how a company can effectively or quickly measure whether any particular communication goes far enough in offering clarity on financial productions.
To help companies meet this challenge head on, the Maru team has built new Consumer Duty communications testing tools called ‘Check’ and ‘Check+’. The tools work by case testing existing and proposed communications across a number of mediums (such as emails, letters, SMS, web pages, scripts, and others) using a survey to a panel of pre-profiled consumers. Presented in an easy-to-use dashboard, the tools produce results which show whether consumers understand messages and it quickly identifies communications which need improvement against the FCA’s new standards. This also includes a subsample of vulnerable consumers too, meaning that brands can confidently assess how their messaging stacks up against this new FCA requirement.
As part of the Consumer Duty compliance process, many companies have also gone further with comprehensive consumer research that unearths an even stronger understanding of their customers' needs and experiences. This has produced deeper consumer insights about how customers are interacting with their services and areas for improving customer journeys. With a stronger emphasis on customer experience, brands are uncovering previously overlooked aspects of their services, identifying previously unknown pain points with online experience (such as navigation difficulties or unclear instructions) and understanding barriers that prevent customers from fully accessing services. This is putting customers back in the driving seat while also empowering companies to better design their products, services, and online experiences so that they’re better aligned with customer expectations and needs. In turn, these proactive adjustments are going beyond Consumer Duty requirements to foster better consumer trust, loyalty, and relationships - giving them the competitive edge.
How Maru Can Help
At Maru, we understand the challenges and opportunities presented by Consumer Duty. We have worked closely with our clients from the outset to develop a robust, cost-effective mechanism for ensuring compliance with regulatory requirements related to the Consumer Understanding outcome.
Our ‘Check’ and ‘Check+’ comms testing solution is designed to help companies navigate and implement Consumer Duty efficiently:
Discover two tiers of comms testing — Check and Check+. Check is ideal for straightforward communications while Check+ is designed to assess longer, more complex messaging.
Both tools use surveys, validated in over 300 projects, to help assess customer understanding, clarity, language, layout, and more.
Reach consumers and vulnerable consumer audiences, ensuring that your communications can be checked for understanding and compliance even for more vulnerable customers.
Our transparent subscription model allows companies to activate comms tests without delay and quickly scale to meet evolving business needs.
Our live Results Dashboards provide instant viewing of test results, allowing businesses to quickly identify areas for improvement in communications such as emails, letters, SMS, web pages, scripts, and direct mail.
Keep all testing information in one secure, accessible place, ensuring consistent formats and future-proofing compliance activities.
In addition to the above features, Check and Check+ offers additional features to further improve your communications’ ‘ease of understanding’ among customers:
Our statistically validated solution has proven that ‘ease of understanding’ has a very high minimum threshold, which can vary depending on customer profile. Our team can advise where your benchmark understanding score for ‘ease of understanding‘ should be relative to your brand and market sector.
Our tool tests for proven understanding of communications, as there is a gap between customers’ claimed understanding and their actual understanding of communications.
Our analysis reveals the factors that explain most variance in customer understanding - making us ideally placed to advise on the areas of understanding that business should be focusing on and why.
We also offer a range of CX insights and consumer research tools designed to help brands gain a deeper understanding of their customers, how they feel, behave, and think, and what that means for businesses. To enquire about our CX programmes or our Check and Check+ Consumer Duty platform please get in touch with our team.