OPINION Revolutionising financial services: harnessing human insights for FCA compliance

Caroline Vize

Caroline Vize, Director of Solutions Consulting at UserTesting, looks at how user testing can enhance consumer duty performance.


Last year, the Financial Conduct Authority (FCA) introduced game-changing legislation in the form of the Consumer Duty. The new duty challenges financial institutions to prioritise consumer understanding, support and fair value from their financial products and services.

This signals a huge change for the financial services industry, and a demanding one at that. Compliance with this Duty requires businesses to actively embrace a fresh, strategic approach that enhances consumer understanding and support at every part of the process. Financial organisations must prioritise user-centric design principles when developing and offering financial products and services.

To make sure financial services providers are compliant with the Duty, businesses will need to conduct regular and extensive user research to ensure they understand customer needs, and embedding their feedback into the product development process. While this may sound like another burden to place on businesses, the long-term benefits of user research make it an efficient method of updating or launching consumer products and services.

So how can businesses navigate this difficult approach to compliance? The easiest and quickest way to do this is to ask consumers how their needs can be met, making them not just beneficiaries but active participants in shaping a more user-friendly landscape.


Understanding the consumer landscape: the role of user testing

User testing is often dismissed as another quality assurance process, but when it comes to consumer experience, it emerges as a strategic tool in understanding the intricate details of consumer behaviour, expectations, and preferences. Essentially, user testing syncs seamlessly with the FCA’s emphasis on clear communication and personalised financial guidance.

Usability and clarity testing is a great way to ensure a user-friendly experience by addressing potential pain points, streamlining interactions, and ensuring users can easily comprehend and engage with the product or service being tested. This iterative testing process, based on qualitative data, is crucial for designing products that not only meet functional requirements but also align with user expectations and preferences. Financial institutions can gain valuable insights into how consumers interact with interfaces, ensuring that information is presented in a way that is Duty-compliant and creating a better overall user experience.

Jargon-free communication is a focal point of the FCA’s Consumer Duty, and insights gathered during testing can reveal linguistic pitfalls and empower businesses to adopt a communication style that resonates with the average consumer, fostering understanding and transparency and avoiding negative reactions or responses.


Personalisation and tailored guidance

One of the key purposes of these new regulations is empowering individuals through personalised financial guidance. By observing how users respond to personalised recommendations during testing, businesses can refine these systems to align with the FCA’s encouragement of consumer empowerment. Iterative testing also ensures that the advice offered is in itself FCA compliant, even when communicated using new technologies such as AI and AR.

User testing can also provide an avenue for identifying and addressing gaps in customers’ financial literacy. This then becomes a continuous loop of improvement, ensuring that educational resources are not only compliant and relevant but genuinely impactful for customers.


Internal cultural and organisational transformation

Compliance with the FCA’s Consumer Duty extends beyond customer-facing processes; it requires a cultural transformation within financial institutions. User testing, applied internally, becomes a powerful tool for ensuring that employees understand and embody the FCA’s principles of consumer understanding and support.

Organisations often struggle with translating regulatory mandates into tangible, cultural shifts. By testing internal communications, training materials, and cultural transformation initiatives, businesses can ensure that their staff comprehends and internalises the essence of these new regulations.

These human insights can identify areas where training or clarification is needed, or where there may be misunderstandings. This ensures that the organisational transformation aligns seamlessly with the FCA’s objectives, turning compliance into a cultural transformation rather than a regulatory burden.


Redress mechanism and fair treatment: elevating consumer support

User testing can also provide insights into consumers’ perceptions of fairness when they feel they have been wronged or a mistake has been made. Businesses and customers must share the same meaning when communicating on issues around fair treatment. Insights from testing sessions offer a nuanced understanding of how consumers interpret fairness, allowing for adjustments that go to the heart of the Consumer Duty.

The FCA places a premium on fair treatment throughout the consumer journey, and user testing’s quality assurance function works well in fine-tuning mechanisms and ensuring equitable treatment. Testing scenarios where unhappy consumers seek support allows organisations to identify any bottlenecks or challenges in existing redress mechanisms, and stress-test new ones. Insights gathered from testing help refine these processes, ensuring that they align with the FCA’s requirement for fair treatment and resolution.

Additionally, user testing provides a window into the consumer experience during these difficult moments. Is the organisation’s reasoning clear? Are they communicated efficiently, and in a way that shows understanding? These insights, collected from real users, offer a qualitative look at compliance efforts in this area, making complaint mechanisms consumer-friendly, compliant and as stress-free as possible.


Future-proofing through iterative testing

Language and communication are constantly evolving, and so is consumer understanding. Even the meaning of what constitutes ‘support’ can change over time. This is why iterative user testing, properly integrated into a proactive engagement strategy, is key to ensuring processes remain FCA compliant.

Regular testing sessions provide a platform for consumers to share their evolving expectations, ensuring that financial institutions stay ahead of the curve in meeting changing needs. These feedback loops can be applied to all areas of the business and overall business strategies. By incorporating user insights into decision-making processes, businesses are less likely to become trapped in an industry bubble populated with jargon and technical terms that later have to be deciphered for the ordinary consumer.


A consumer-centric future

Compliance isn’t just about ticking regulatory boxes; it’s about creating an environment and a system where consumers actively shape the financial services landscape.

The FCA’s Consumer Duty is an invitation for financial institutions to revolutionise their approach to their customers. By harnessing the power of user testing and human insights, businesses can proactively engage with the Duty and strategically ensure compliance in a customer-centric world.

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