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Navigating Consumer Duty

What is the right approach?

Consumer Duty has been top of mind for those of us working within financial services. And the question on all our lips is: how do you prove to the FCA that your customers are getting the information they need, in a way they understand? In our second article of our new series ('navigating Consumer Duty: a Savanta series') we discuss when qualitative and quantitative approaches should be used, and introduce our new framework for Consumer Duty communications testing.

Kathy Ellison Director 01/03/2023

At the heart of Consumer Duty, is the need to evidence that your customers see and feel a positive experience, avoiding potential harm. But it’s not enough to say the customer experience is compliant, firms need to prove it.

To take the stress out of the process, Savanta has developed a cutting-edge framework for Consumer Duty Communications Testing that will ensure you’re compliant before the July 2023 deadline. Click here to download our framework spec sheet.

Quantitative vs. qualitative: what approach is right for you?

For most communications, a quantitative approach is suitable – especially for robustness and speed. But, if the communication format, product, or action is complex, a qualitative approach would be needed.

A quantitative approach will apply for:
  • Short letter and email wording
  • Charges or interest rate notices
  • Texts
  • Simple website screenshots
  • Short call centre scripts
A qualitative approach will apply for:
  • Extended T&Cs
  • Long documents with detailed explanations or scripts
  • Where a decision to purchase is being made as a result
  • Where the call to action could lead to specific harm
Communicating with vulnerable customers

Additionally, a qualitative research approach is often more suitable for vulnerable customers.

The FCA’s four vulnerable customer categories:

When considering the FCA’s four vulnerable consumer categories (see above), it’s clear that anyone can find themselves in vulnerable circumstances at any time. The recent coronavirus pandemic is indicative of how quickly people’s circumstances can change.

Therefore, in all Consumer Duty communications testing, firms should set a minimum quota of vulnerable customers. And in many cases, these will be added as a qualitative ‘booster’.

Why is vulnerability an important consideration?

Online quantitative surveys will miss some vulnerable groups: for example, those digitally excluded or who have poor digital skills will not be on panels and will not be able to complete an online survey; older customers, non-English speakers, blind and other disabilities may also be missed.

The nuances of confusion among vulnerable customers may not be truly judged on a short quantitative survey – whereas a qualitative approach can use careful probing, visualise body language, and spot behavioural biases.

Consumer Duty testing methods

A solution would be one-to-one in-depth interviews (either face-to-face or video calls) – and this works well.

There is also the option to run group discussions, where solutions can be brainstormed to demonstrate understanding and these can be run in a co-creation way with you (as the client) present.

Firms can choose to send communications to respondents in advance, by the method they would naturally receive them, and get their personal and immediate views before any research probing takes place.

Whichever route is chosen, communications testing must be carried out within the context of a real-life experience. Research respondents will either be selected from a list of live customers or will be chosen as ‘in the market’ and will be given a clear and relevant scenario for context.

In summary

As with any research, providing proof for Consumer Duty compliance must strike the balance between consistency & flexibility.

Having the right methodology and using a templated solution that can be morphed to meet your firm’s specific needs will provide a strong head start.

Ready to get started with your communications testing? We have you covered.

More from the series:

This is the second article in our series – ‘Navigating Consumer Duty: a Savanta series’, which aims to help financial services professionals prepare for the new FCA regulations coming into effect this year. We provide guidance and advice to help your business plan, test and evidence compliance to meet the new standards.

To access more articles from the series, click the links below, or get in touch with one of our financial services researchers if you’d like to talk more about this topic.

Download our Consumer Duty Communications Testing Framework factsheet via the form below.

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