Consumer Duty is a significant new piece of regulation from the Financial Conduct Authority that aims to improve the levels of customer care across the financial services sector. Wide-ranging in its scope, Consumer Duty aims to ensure good customer outcomes across financial services firms.
‘The current economic climate means it’s more important than ever that consumers are able to make good financial decisions,” said Sheldon Mills, Executive Director of Consumers and Competition, at the launch of Consumer Duty in July 2022. “The financial services industry needs to give people the support and information they need and put their customers first.”
Consumer Duty rules require firms to act in good faith, aim to avoid causing harm to consumers, and enable and support customers in their financial objectives. The rules require firms to ensure consumers receive communications they can understand, products and services that meet their needs and offer fair value, as well as provide the support they need.
So, how should the sector be adapting marketing and communications to improve customer outcomes? Let’s take a look.
Support customer understanding
The FCA suggests that financial services firms support consumer understanding by ensuring that their communications are simple and easy to understand. One way to do this is to make sure key information on features, charges, timelines and product information are easy to find. The FCA says it’s safer to assume a low level of sophistication from customers and adapt communications appropriately.
Present information clearly
To assist with understanding, the FCA recommends layering information in a way that helps customers make better decisions. This includes highlighting key information and using space wisely. It’s up to your business to decide what is key information. The FCA points to multi-media as a way of better conveying information and engaging audiences.
The right message at the right time
Bespoke communications will be part of the solution. Firms won’t be expected to tailor communications to each individual, but the FCA recommends revisiting your approach to mass-marketing to ensure messaging is always appropriate to an intended group. A key ingredient is ensuring consistent communication throughout the product’s life cycle, not just at point of sale.
Test, test and test again
Consumer Duty does not require firms to test their marketing. However, businesses must show that their messaging is landing correctly with clients, and testing is the most effective way of achieving this goal. Again, deciding how to approach this is at the discretion of the business. Keep this question in mind: what are the risks if this communication is misunderstood? And adapt accordingly.
Monitoring and governance
To discover whether your communications are having the intended effect, it’s important to take a short-term and long-term view. In some cases, you might find that communications are landing immediately. With more complex products or services, the opposite might be true. A governance framework for communications and oversight will help you meet Consumer Duty requirements.
If you’d like to know more about adapting your communications to meet Consumer Duty requirements, reach out to firstname.lastname@example.org