FCA Consumer Duty: Tools & Methods for Research Ops, MR, UX and CX teams
The FCA Consumer Duty impacts the practices and policies of over 60,000 financial firms in the UK. Pretty much every financial services institution we speak to have raised questions about how best to conduct the research required to comply with this new legislation.
Through working with some of the UK’s largest financial institutions, we know first hand that implementing the processes, tools and resources (not to mention achieving the culture change) needed to become a truly customer centric organisation is hard. Customer Centricity has always been a strategic goal but one without a hard deadline. Until now.
We believe that UK financial institutions should look at the FCA Consumer Duty not just as legislation they must comply with, but as an opportunity to both accelerate and achieve company wide customer centricity.
To help our customers navigate the transition to Consumer Duty, this article briefly introduces some key areas of the legislation but with a particular focus on customer-centricity. If you want a detailed explanation of Consumer Duty, please visit the FCA Consumer Duty website.
This article also lists the Research Methods and Research Tools that can be used to help Research Ops, Market Research, UX Research and CX teams build a contextual and empathic understanding of their customers.
We also list the capabilities of the Indeemo platform that are most relevant for FCA Consumer Duty compliance.
“It’s possible that the FCA Consumer Duty is the first piece of legislation that makes Customer Centricity a legal requirement.”
What is the FCA Consumer Duty?
The FCA Consumer Duty - noted as the largest regulatory overhaul within Financial Services of the last decade multiple (Kieran Patel, 2022) - is a new set of rules and regulations designed by the UK’s Financial Conduct Authority (FCA), which incorporates a central consumer principle that a business must act to deliver good outcomes for the Retail consumers of its products.
From a Researcher’s perspective, it is worth noting however that the definition “Retail Customers” covers both consumers and B2B customers and includes the following:
For consumer credit, it relates to all credit related activities
For deposit tasking activities, it applies to consumers and micro-enterprises
For investments, it applies to non professional clients
It applies to all regulated mortgage products.
For payments, it applies to consumers and micro-enterprises.
In certain instances, it can apply to SMEs also.
The new FCA Consumer Duty regulations will cut across all areas of a financial services business including, marketing and communications, customer services, and the design and development of new products and services.
Who does the FCA Consumer Duty apply to?
Whilst the FCAs rules will impact over 60,000 financial firms in the UK only, all other industries are watching closely as this can be seen as one of (if not the first) regulations in the world that forces organisations to become truly customer centric.
Ultimately, Consumer Duty focuses solely on an overall duty of care to Retail Customers who purchase a Financial Institution's Products or Services. The final regulations and documentations of the FCAs Consumer Duty will essentially replace two principles for regulated businesses (Principle 6 & 7).
Principle 6: A firm must pay due regard to the interests of its customers and treat them fairly.
Principle 7: A firm must pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading.
With more complex and detailed regulatory processes embedded in the new Consumer Duty, it will directly impact Financial services in the UK - Banks, Insurance Companies, Money Lenders etc. Most importantly, the outcomes of the Consumer Duty will impact and benefit the consumer. This includes some business, individual consumers, and critically, customers that are deemed vulnerable.
FCA Consumer Duty: Vulnerable Customers
Those deemed as vulnerable customers are defined as “someone who, due to their personal circumstances, are especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care” (Sarah Ronald, 2022).
In their finalised guidance on the Consumer Duty, the FCA explicitly refer to the importance the vulnerable customers will benefit from the outcomes of the new regulations noting - “We expect consumers with characteristics of vulnerability to benefit from the overall improvements in outcomes delivered as a result of the new Duty” (FCA Finalised Consumer Duty Guidance).
Consumer Duty: the pivotal role of Research Ops, UX, CX, and Market Research Teams
With the onus on financial firms to prove that they put the customer first, there needs to be increased alignment across all teams to meet Consumer Duty compliance.
To achieve this goal, we believe that Research Ops and Design Ops teams will play a crucial role in helping organisations centralise and streamline all forms of research across all the various teams and departments.
With a specific focus on Consumer Duty, Market Research, Insights, UX Research and CX teams will be critical actors when it comes to helping financial institutions understand the behaviours and experiences of customers.
These teams will need to develop a more contextual understanding of the customer journey for every product and service offered by their financial institution for every customer personas they serve.
Why is Consumer Duty Important?
As we mentioned earlier in this post, Consumer Duty should also be viewed as the first customer first / customer-centric legislation. It means that the voice of the customer, their vulnerabilities to meeting financial objectives and receiving the right duty of care will need to be heard, understood and aligned with all aspects of the organisation.
To meet the requirements of Consumer duty, financial firms will need to implement a range of initiatives, processes, policies, and improvements to their products and services that aim to result in four outcomes as outlined by the FCA.
The Four Outcomes of Consumer Duty
The four outcomes firms must achieve to meet FCA Consumer Duty obligations are:
Consumer understanding - consumers are equipped to make good decisions. Information is made available at the right time and is understandable.
Price and value – products and services should be sold at a price that reflects their value. There should be no excessively high fees.
Product and services – the firm’s products and services should be fit for purpose. The terms match the target consumer needs and products and services work as expected.
Consumer support – customer service should be responsive and helpful. It should be as easy to complain about or switch and cancel products or services as it was to buy them.
With respect to these four outcomes, many of our clients are asking the same question: to meet these requirements, what are the best ways for me and my team to research our customers? Essentially, how can firms get closer to their customers in a way that will enable them to implement changes according to Consumer Duty?
Research Methods & Techniques for FCA Consumer Duty Compliance
Here is a range of research methods and tools that MR, UX and CX teams can leverage for each of the 4 outcomes of the FCSA Consumer Duty. If you are familiar with these research methods and would like to know more about how Indeemo’s research tools can help you with some of these methods, please skip to the next section.
Consumer Understanding compliance:
To ensure you accurately define and understand all of your customer segments and personas and provide the right information across all your channels for every customer segment when they need it, the following research methods can help:
Customer Surveys / Segmentations
Price and Value compliance:
To ensure the price a customer pays for a product or service is reasonable compared to the overall benefits the customer will experience, the following research methods can help:
Surveys
Competitor Analysis
Product and Services compliance:
To ensure you design, develop and improve every product and service you offer so that they meet the needs of all of your customer personas, the following research methods can help:
Customer Support compliance:
To ensure customers are aware of and have access to all communication channels they can use and provide them with the right support for changing product or moving provider, the following research methods can help:
The next section details the research tools that can be used to research your compliance with each of the 4 outcomes of the FCA Consumer Duty.
What Research Tools can you use for FCA Consumer Duty compliance?
Regardless of what method you use for your Consumer Duty research, the Indeemo platform offers a variety of research tools that can help.
Furthermore, because Indeemo enables you to capture rich, multimedia, contextual insights, you can use the multimedia data captured to augment your surveys and analytics with real life proof that both underpins and brings your compliance to life.
As the FCA have stated, one of the main goals for firms to comply with Consumer Duty is that they should be able to “put themselves in their customers shoes”.
This is literally what Indeemo helps our customers achieve!
In line with the four outcomes and the ways you can learn about your customers, segmentations, characteristics, vulnerabilities, behaviours, and experiences, here are some of our research tools that can be leveraged for Consumer Duty research.
Generative AI Interview & Focus Group Analysis
You can now import interviews and focus groups into Indeemo from Zoom, Teams or your Computer and analyse them using Generative AI.
Consumer Understanding: Discovery Research Tools
Whether you are doing strategic research for new market opportunities, Generative Research for new product ideas or simply need to better understand your customers, we have a range of discovery research tools that you can use.
For some financial firms, it may be the case that they will need to go back to the drawing board to conduct segmentations or build more up to date user personas that give them a rich and contextualised understanding of their customers.
For all of these Consumer Duty related objectives, the following tools can help:
Using the Indeemo Respondent App and Researcher Dashboard, your customers can use photo, video, text and mobile screen recordings to help you walk in their shoes, share a week in their lives or diary their in-the-moment experiences as they interact with your product or service.
Price and value: Path to Purchase research tools
When it comes to the price and value principle, there are a variety of ways that banks already conduct competitor analysis and price benchmarking. However, to prove and validate the quantitative data, Researchers need a deep understanding of the Retail Customer’s path to purchase. This is particularly critical when proving compliance with Consumer Duty across the entire distribution chain.
Indeemo offers the following research tools to assist with this:
Our Path to Purchase capability enables you to understand omni-channel purchase journeys for every product and service you offer
Mobile Screen Recording can be used to remotely research ow consumers react to your communications and marketing. It can also be used for Usability Testing that helps you compare how customers interact with your websites, apps and other digital media.
Diary Studies allow you to get Customers to keep a diary as they consider purchasing a financial product or service.
Journey Mapping can be incredibly powerful at helping you understand every actor across every stage of the distribution chain. This can include the end customer plus any intermediate agents / partners / brokers who are involved in selling your products and services.
Product and Services: Prototype, Usability testing and Journey Mapping tools
When it comes to products and services, Indeemo has a number of tools to help you research how your customers interact with your comms, apps, websites, branches and written communications.
Mobile Screen Recording helps understand how customers interact with your communications, websites, apps and other digital media.
Product Testing or Concept Testing allows you to research various communications or advertising or wireframes for prototype products and services.
Journey Mapping can be incredibly powerful for helping you research the end to end journey of a customer. It can be particularly powerful at helping you understand how they behave at every stage of the product or service lifecycle.
Finally, if you are developing new products or services, Indeemo can be used for Iterative Research over a period of time as you build and test various prototypes before launching them.
Consumer Support: Customer Experience Research Tools
The Consumer Duty does not stop once a product is sold. In order to prove your compliance with Consumer Duty, you need to understand how customers experience your products and services and how their needs are met over long periods of time.
Furthermore, you need to understand their end to end experience from an initial Google search to purchasing a product or service to actually living with and using it.
For this section of Consumer Duty, we recommend the following tools:
Our Customer Journey Mapping Tool gathers multimedia data from your customers as they interact with any product, service or omni-channel experience at every stage of their journey. The tool automatically creates interactive customer journey maps for you.
Digital Ethnography can be used for longitudinal, customer closeness research to enable you to virtual “live with” your customers over long periods of time and truly assess the benefit and value of your product or service.
CX research allows you to do tactical, contextual qualitative research to augment your analytics or NPS for example and get a deeper understanding of how you support your customers.
The unique power of Customer Journey Mapping tools for Consumer Duty
To be Consumer Duty Compliant, we expect customer journey mapping in particular to play an integral role in mapping every journey of every customer persona for every product and service you offer.
Having up-to-date, contextual journey maps for every product, service and every customer persona who purchases them is, we believe, a powerful way for financial institutions to prove their compliance with Consumer Duty.
With respect to Journey Mapping, our interactive journey maps bring to life every touchpoint of your customers' experience as they interact with your product or services across the entire product / service lifecycle and across your entire distribution chain.
As you begin to learn about your customers and their behaviours, you can use Indeemo to prepare a customer journey map for each customer persona / consumer segment. This will enable you to distinguish between various behaviours and build a list of diverse characteristics directly informed by the journey your customers take.
More importantly, it will help you see, hear and prove the quality of their customer experience regardless of whether their customer journey is online, offline or both.
Enterprise grade security for Vulnerable Customer research
The Indeemo platform is already being used by UK financial institutions for all forms of Market Research and UX / CX.
We are FSQS and ISO 27001 certified. Our platform has been independently penetration tested and certified for handling highly confidential information by some of the UKs largest banks. This means that it will pass the most stringent information security requirements required to conduct sensitive research with vulnerable customers.
Furthermore, our upcoming release of facial blurring will ensure that research participants, particularly vulnerable customers can provide feedback in an entirely anonymous manner.
We know first hand how complex onboarding research platforms into Financial Institutions can be and how long it takes.
If you choose to work with Indeemo, we will get through your onboarding process cleanly.
Let our Tools support your FCA Consumer Duty Research
Indeemo processes your personal data in order to respond to your query and provide you with information about our products and services. Please see our Privacy Statement for further information.
Regardless of your FCA Consumer Duty research requirement, Indeemo can be deployed for a wide range Market Research, UX Research and CX projects.
We can help you get a deeper understanding of every one of your customer personas and consumer segments. We can help you map every customer journey and in doing so, accelerate your journey towards Consumer Duty compliance.
Furthermore, our team of Strategists are experts at working with highly sensitive research for UK financial instructions.
If you’d like to learn more about how Indeemo can help you walk in the shoes of your customers, achieve FCA Consumer Duty compliance and become truly customer centric, please get in touch now.
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