With ISA season in full swing and firms preparing for the new tax year, another date in the calendar looms large over retail financial services.
The start of spring is always a busy time for our clients in the retail financial services (FS) sector, but this year feels more significant — with the end of April marking the last key milestone ahead of the Consumer Duty coming into effect on July 31st. Building upon previous policies and principles, the Duty requires firms to put retail customers at the heart of organisational decisions to an extent not seen before; bringing in new rules that touch all parts of the business, from strategic planning down to individual customer interactions.
In time for the April deadline, manufacturers of financial products must have completed all reviews of their existing open products that are necessary for them to meet the new Duty, then share information with their distributors — so they too can make preparations and implement changes ahead of the rules coming into force.
The Duty is a significant shift in how financial services are regulated, reflecting the FCA’s strategic ambition to increase competition and consumer protection through outcomes-based regulation. It will impose higher and more exacting standards for all parties in the distribution chain for retail customers. Underpinning the new ‘Consumer Principle’ — that asserts that firms must act to deliver good outcomes for retail customers — are three cross-cutting rules. The rules lay down the FCA’s expectation for firms to act in good faith, avoid causing foreseeable harm, and enable and support customers to pursue their financial objectives.
Policymakers have long wrangled with the retail financial services sector due to its capacity to cause detriment to consumers, by nature of the products and services themselves, coupled with the widespread vulnerability of consumers in the market. As the FCA’s most recent Financial Lives Survey found, 47% of UK adults show characteristics of vulnerability, related to factors of health, life events, resilience, or capability. In a rapidly evolving and increasingly complex financial marketplace it’s therefore vital that firms ensure they are communicating effectively with their customers, supporting them in realising the benefits of their purchases, and consistently being considerate and responsive to their needs throughout the product or service lifecycle.
To achieve this, firms must consider the needs, characteristics and objectives of all their customers — especially those who may be vulnerable — at all stages of the design process. Firms need to actively monitor and review the outcomes that their customers are experiencing, while being ready to take action to address issues that can lead to foreseeable harm or risk good customer outcomes. In achieving this goal, the Duty brings an expectation that firms will apply the same standard and act just as quickly to ensure they’re delivering good consumer outcomes as they would to other elements that more directly benefit the firm, such as product development and sales — putting processes in place to identify issues and stop them occurring again in the future.
Over the last year, our UX researchers and designers have assisted FS clients to meet their enhanced obligations under the Duty, enabling them to step into their customers’ shoes and consistently consider their needs and behaviours throughout the design process: from development and testing, through to launch and ongoing review. From discovery, usability testing, and depth interviews, to accessibility auditing and mapping of end-to-end journeys, our team has helped our FS clients identify where their products and services may not be delivering good outcomes in line with the Duty and — more importantly — understand why.
So, as Dodl — the fintech app we developed for AJ Bell — approaches its first birthday (🎉) we are proud to have recently worked with them to more deeply understand their users’ experiences of investing using the app. Through a design sprint format as part of Dodl’s ongoing product testing and review, we rapidly carried out deep user research to assess how well the product is supporting and enabling their customers to make informed choices in the investment journey, revealing points of frustration, and risks to good outcomes.
As the first major piece of qualitative user research since launch, Dodl were keen to speak directly to their users not only to better understand how the product was performing functionally but also how well it was living up to its promise of being an easy-to-use, no-nonsense platform for those new to the world of investing.
The research identified opportunities that spanned key elements of the firm-consumer relationship, providing new insight into their users’ evolving needs, characteristics and objectives at key stages of the investment journey, and how the presentation, navigation, and access to support could better facilitate informed decision-making. Importantly, the research also identified key areas where there was a risk of harm to vulnerable users, related to drivers such as health and financial capability.
“Our recent UX research with hedgehog lab has been invaluable across a number of Consumer Duty outcomes. From identifying accessibility issues in the app for vulnerable customers, to making our in-app chat more prominent for customer support, and highlighting areas where we can reassure customers more and help them understand the investing process. What’s better is that hedgehog have helped us with actionable insights, so we can make immediate improvements for our customers.”Emma Keywood, Senior Product and Marketing Manager, AJ Bell
All target markets are likely to include customers with characteristics of vulnerability, but with Dodl specifically targeting users that are new to the world of investing — often with low financial capability — it is paramount to them that they support and reassure new investors as they take their first steps. Following the research, the hedgehog lab team conducted a full accessibility audit of the investment journey, and Dodl quickly took action; implementing design changes that improved the experience for all users and above all prevented harm from occurring.
As the FCA prepares to enforce the Duty and regulators push the imperative for FS firms and design teams to play a proactive role in building financial markets that are fair and inclusive, we must be aware that all consumers are at risk of harm from the products and services we design, and the systems, processes, technologies and business models that surround them. In making the FS sector work better for a wide range of users, UX can play a valuable role in achieving a deeper understanding of your users’ lived experiences, recognising the diversity of those experiences, and helping design solutions that work better for everybody.
If you are interested in understanding more about how our experienced team of researchers and designers can support you in meeting your obligations under the Consumer Duty, get in touch now.
By Alex File, UX Researcher at hedgehog lab