Consumer Understanding

What does the FCA say

"We want customers to be given the information they need, at the right time, and presented in a way they can understand. This is an integral part of firms creating an environment in which customers can pursue their financial objectives."

FCA expectations and what this means for you

Firms should "put themselves in their customers’ shoes" when considering whether their communications equip customers with the right information, at the right time, to understand the product or service in question and make effective decisions. An effective decision will usually be one that maximises the likelihood of a customer achieving a good outcome.

Communications should be understandable by the intended recipients and enable them to evaluate their options by assessing the benefits, risks and costs associated with those options, and how those options relate to their needs and financial objectives.

Layering: This is where key information is provided upfront with cross-references or links to further detail and can be particularly effective online.

Engaging: Communications should be designed in a way that encourages consumers to engage with them.

Relevant: Firms should consider the appropriate level of detail for each communication.

Simple: Effective communications will present information in a logical manner.

Well timed: Firms should communicate with customers in a timely manner and at appropriate touch points throughout the product lifecycle.

Themes

Testing: Ensuring the communications with customers are effective and support a good outcome particularly in terms of being relevant, engaging, simple and well-timed through using a robust testing process especially taking into account any vulnerabilities.

Monitoring: Having processes in place to continuously check the efficacy of the communications between the business and the customer, for example reviewing complaints and survey results.

Training: This is essential to make sure all areas of the business in contact with the customer, whether directly or indirectly, have knowledge of the processes and systems to achieve good outcomes for customers.

Customer Journey: An end to end documented process that highlights the key customer stages they go through when purchasing a product or service and the communications they receive.

Governance: This ensures there are the right controls in place to manage and escalate feedback to continue to meet the demands of the customer and help achieve their financial objectives.

Actions to take

• Think about how you communicate with your customers, is it clear and transparent? Make sure you review your communications that a customer receives, for example; website content, letters or guidance documents.
• Work out what changes are needed to your monitoring activities, including what additional evidence you will need to show compliance for example, enhancing Quality Assurance (QA) to equip the team with the skills to test the effectiveness of communications customers receive or adding additional questions to surveys.
• Have a think about your vulnerable customer processes, are they clear for your staff to follow, do your staff know how to escalate queries so that a resolution can be achieved in a reasonable amount of time.
• Consider whether other parties you work with in the distribution chain are aware of their responsibilities under Consumer Duty.
• Revisit your policies and procedures to ensure that they are delivering good outcomes for customers.
• Review current data points against the FCA guidance and implement in the existing reports