Consumer Duty

5 ways financial firms can improve consumer understanding

7 min read

Ensuring consumers are provided with the information they need, in a way they understand to make informed decisions about financial products and services is no longer optional. The FCA has made this clear in their Customer Duty of Care Proposals (CDC). 

Financial services providers have a serious responsibility to improve consumer understanding that they don’t have the luxury to ignore any longer. Unlike other businesses where consumers can make poor decisions and not feel the heat, a poor financial move can affect the life quality of the consumer, and power like this shouldn’t be taken lightly by the showrunners. According to Salesforce’s State of the Connected Customer“ report, 84% of customers say the experience a company provides is as important as its products or services.

To be compliant with the new regulations, the FCA has specified that firms have to communicate to consumers in a way that is reasonably likely to be understood and that facilitates decision-making. It’s no longer enough to throw ambiguous terms or jargon at customers. For example, if advice firms are really honest with themselves, could they reasonably agree that their clients know they can switch off ongoing advice? Can consumer lending companies honestly say their customers understand interest and repayment terms? When customer representatives in call centres reel off mandatory statements and scripts, do customers really understand what is being communicated? 

The FCA has also outlined that firms should review their communications and if there is a need, test that the steps they have taken support clear communication that facilitates consumer understanding. Many firms aren’t sure what this means for them moving forward. Should there be an overhaul of their processes or a review of existing ones? How do they become compliant? How do they evidence it? In this article, we outline 5 key ways firms can improve consumer understanding of existing services and evidence it:


Review fairness of products and services

Improving consumer understanding aims to equip consumers to make the best decisions and enhance their financial outcomes. However, if the products and services offered aren’t fair from the outset, opting for those offerings will not lead to a fair consumer outcome, no matter how improved consumer understanding is. 

Before improving understanding, financial firms should review existing products and services and, where appropriate, replace unfair offerings with ones that promote better consumer outcomes. This also involves removing any unfair products and services sold to consumers previously under the guise of ambiguity in communication. 

Increasing advancements in technology, especially Artificial Intelligence and Natural Language Processing, can help firms efficiently review the fairness of products and services and improve their processes. For example, by using conversational intelligence to monitor all customer interactions, firms can identify which products and services receive the most complaints and better understand what they need to focus on improving. Salesforce wrote in their State of the Connected Customer report that 75% of customers expect companies to use new technologies to improve their experiences.


Transparency and consistency in messaging

Transparent messaging aids clarity and ensures no important messaging is hidden behind ambiguous and inaccessible jargon. Financial firms should keep the target audience in mind and ensure that accessibility of information is a priority in both the means and content of the communication. An efficient way to achieve this is to understand your customers on an individual level. Who are they? What are their pain points? How vulnerable are they? What is their education level? Etc. Understanding them is the first step in promoting transparent and clear communication where A actually means A. Transparency implies there won’t be hidden charges or hidden terms behind the face value of the offer you are making to consumers. It means that firms should support consumers to make the best decisions for their situation, communicate any changes, and exactly what is going on just as it is. 


In this case, transparency and consistency are like siamese twins. It’s essential for the messaging to be consistent so firms aren’t saying one thing one in one situation and something different in the next. Consistency of messaging across your channels should be non-negotiable. That way, there is a sync in all forms of communication, and consumers have a clearer understanding. With speech analytics, firms can monitor all communication, ensuring that messaging is consistent and there is adherence to mandatory statements or scripts. This is the most effective way to discover and terminate any oversight in communication.


Training and vetting call agents 

Any financial firm seeking to comply with the FCA regulations should ensure that all agents or personnel who are a point of contact between the company and consumers are well trained. They need to be fully aware of any changes to the terms of their products and services and the best way to communicate information to the consumers. If they don’t have a clear understanding, there is little chance they’ll be able to educate and inform customers effectively. However, how can firms tell that agents fully understand? Also, how can firms vet each agent’s performance when they often handle an overwhelming quantity of calls from consumers?


The ideal way to achieve this is by leaning on technology. Speech analytics platforms like Aveni Detect enable firms to monitor 100% of consumer interactions, identify agent knowledge gaps, and even deliver personalised coaching opportunities. This type of speech analytics technology can process all interactions and provide insights into agent performance if key messaging points and mandatory statements are made, how they are made, and how consumers respond.

This is a practical way to vet communications in a meaningful way, bridge any communication gaps and train agents, and ensure agents are working to promote consumer understanding. It gives firms the tool to monitor the quality of language used, mandatory statements and scripts adherence, professionalism, tone, and clarity of agents when communicating with customers.


Monitor complaints and remove points of customer friction  


Financial firms should pay attention to consumers and what their complaints are. What are the products or services that are getting more complaints? What are the reasons behind the complaints? Did their lack of understanding lead to frustration after finding the actual terms of services they signed up for? 


The FCA requires firms to identify and remove sludge practices which they define as ‘an excessive friction that hinders consumers from making decisions in their interests, by taking advantage of their behavioural biases.’ Firms can use speech analytics to achieve this effectively and reduce the risk of being sanctioned. Speech analytics allows firms to identify points in the customer journey that have excessive friction by monitoring complaints across 100% of their customer interactions. It can surface insights around reasons behind complaints and provide actionable outcomes e.g. better agent training, better communications around terms and conditions, adjusting products and services, etc. This way it’s easier to ensure consumer complaints are responded to with solutions that elevate their concerns, remove friction points and improve consumer understanding. 


Speech analytics is also useful in situations the consumer isn’t satisfied but doesn’t make an official complaint. The technology can flag it when consumers use certain terms in conversations. For example, a consumer can express dissatisfaction with a product or service but refuse to make an official complaint when the agent asks if they want to. Speech analytics can pick up what they’ve said, and firms can use this feedback to improve products and services, and consumer experience.


Confirm that customers have understood and accepted the new terms of sale or service

It’s not enough to communicate with consumers. Financial firms should proceed to elicit feedback from them to ensure they understand what has been communicated and the implications of decisions they make. To comply with the consumer duty proposal, financial firms must receive direct feedback that consumers understand new terms of sale or service and can make decisions from a well-informed position. 


By monitoring all consumer interactions, firms can see for themselves if consumers are communicated in a way that is reasonably likely to be understood and that facilitates decision-making. If not, they can employ new strategies to ensure that they do. They can also evidence this fact to FCA with Aveni Detect. Firms can also see if mandatory statements are made to consumers so they can evidence that specific scripts created to boost customer understanding are adhered to.  They can also provide evidence to regulators that the customer has understood by playing back recordings and transcripts showing the customer confirmed they understood what they were signing up for.

The consumer duty proposals increase the risk of regulatory censure and personal risk of fines or prosecution of board members and directors if serious breaches are found, making it mandatory to improve consumer understanding and evidence it. Vetting consumer understanding and improving it where relevant should be an ongoing process for existing and new customers. This should, in fact, be a major process for financial firms because beyond being compliant with the FCA proposal, this will have a significant impact on consumer experience and create products and services that align with consumer needs. 

Speech analytics platforms like Aveni Detect make this achievable by providing financial firms with a powerful tool to analyse all consumer interactions continuously, maintain a record and improve consumer understanding where relevant. Technology has provided advanced solutions to challenges in consumer relations and interactions, and financial firms embracing these solutions is the way forward. 


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