Top 3 Actions to Prepare for the New Consumer Duty

The Financial Conduct Authority (FCA) has just announced new regulatory requirements for 2023. The New Consumer Duty requires all financial firms that service customers in the United Kingdom to follow new consumer protection regulations or face serious fines. 

The New Consumer Duty is designed to change the way financial firms conduct their business. The goal is to turn the firms’ attention away from improving their bottom line to focus on delivering four customer outcomes:

Clear Communications

Audience Focused Products

Customer Service

Fair Pricing

These new regulations go into effect starting in July of 2023. This means that financial firms like yours need to be taking action now! In this blog post, we walk through how you can approach achieving the first three of the four outcomes. 

The focus of this regulation is to make sure that consumers are receiving clear information in a timely manner, understand the risks associated with your financial products, and can easily get help when using your products. Here are three surefire ways to start preparing your content for the New Consumer Duty regulations.

1. Understand Your Audience

Your first step is to understand the audiences you serve and which products are best fit for specific audiences. This will determine how your content needs to change to meet the New Consumer Duty requirements. For example:

Traditional Savings Products

Consumer Audiences interested in traditional savings vehicles may not be savvy financial investors. The promise of impressive gains may lure them into a risky investment product. Even if the performance may be true, if the risks associated with this investment are written in a confusing and convoluted manner, many people may enter this investment and lose a significant amount of money. If these products properly disclose the risks in a clear and concise manner, that’s easy for audiences to understand, they’d be able to make the right decision based on their financial needs. 

Advanced Investment Products

Investment Audiences who are more financially literate might understand the risks associated with advanced investment products and won’t require the level of clarity a traditional consumer likely needs. By shaping content to this audience, you’re more likely to align with their expectations and avoid less savvy investors accidentally stumbling into risky products.

Understanding the level of clarity your audience needs requires a bit of experimentation. A/B testing is a great exercise to explore which approach works best. As you craft content, you can create multiple variations for consumers to engage with or provide feedback on. You can try using acronyms in some examples, while removing all acronyms in others. Additionally, you can measure the readability of the content by scoring it against the Flesch Reading Scale. You can measure the time-on-page of the asset and the conversion rates generated by your visitors. 

As consumers give feedback on their satisfaction with that content, you can then understand how you must craft the messaging in your content to align with that audience.

2. Gap Analysis for the New Consumer Duty

Your content is the primary touchpoint of your consumer interactions. The New Consumer Duty requires that your content: 

• Aligns to its intended audience
• Is easy to read and understand by that intended audience

That means you’ll need to review all of your existing and new content to be sure it’s aligned with the audience it’s intended for and that it’s clear. This isn’t something you can rely on people to execute. It’s estimated that the average editor reviews up to 200 pages per day. That means that one person can review 10,000 pages per year, with only two weeks of holiday pay. 

Many financial firms have hundreds of thousands of content pages across marketing, disclaimer, regulatory, and disclosure documentation that’s REQUIRED to be reviewed. Even if you were to hire a team assigned to reviewing content, you’re still increasing your risk because of the common errors or mistakes that human editors can introduce. To analyze content gaps and clarity issues, using enterprise content governance is the most effective approach.  

3. Implementing Gap Updates for the New Consumer Duty

Understanding where your gaps are is a great first step. The ultimate goal is to create and update that existing content to meet the clarity needs of your intended audience in order to satisfy the FCA that you’re truly meeting the New Consumer Duty. A process must be established to not only identify the updates required to your new and existing content, but also to implement changes into that content. Editors will need to edit and highlight changes that content writers will need to update in the existing content. 

New products take priority here as existing products aren’t required to meet the new regulations until July of 2024. New newly developed products must meet established criteria when released. Content must continue to meet this criteria should any shifts happen in the clarity expectations of your intended audience. The FCA has committed to not only review and approve products as they’re submitted but to also check in on the continuing performance of those products. This is to ensure they continue to meet the needs of the intended audience. This means that content must continually be reviewed to confirm it continues to meet the New Consumer Duty regulation. 

4. BONUS: Providing Proof to the FCA

The FCA has made it clear that it’s the responsibility of the firm to make sure that they’re clearly communicating important information, product specifications, risk assessments and other information for consumers to make informed decisions. It’s also the responsibility of the firm to prove that they continue to meet the new requirements. There are several ways to prove if products are meeting those standards. 

• Tracking the satisfaction of consumers who engage with those products. This could be from simple on-page questionnaires, feedback surveys, and financial performance
• Measuring which products-specific audiences engage with.
• Benchmarking content to show continuous improvement over time to meet audience needs

Whether you’re marketing new products, improving clarity, identifying new markets, or improving your customer support experience, content is the pivotal factor in enabling consumers and employees to give the best possible experience.