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The shift to centre consumers123

The new FCA Consumer Duty will drastically reshape the way firms interact with customers, as well as how they design and market products and services. Come July 2023; consumer interests will no longer be a secondary consideration; they will be front and centre in every decision that firms make. This will have major implications for business and culture at UK financial organizations.

To accomplish this, all market players must re-evaluate their entire product or service lifecycle and redesign every aspect to centre the customer journey. This will include:2

  • Product and Service: Firms must evaluate both their product or service design and their distribution strategy in order to ensure no behavioural biases are exploited from the product’s inception.
  • Price and Value: Firms must ensure adequate value for the cost is provided to their customer base. Firms must not overprice their offerings in pursuit of excess profit to the detriment of the consumer.
  • Consumer Understanding: Firms must ensure consumers understand their products and core offerings without an unreasonable degree of effort. Firms must not bury key information in “the fine print” or withhold relevant knowledge.
  • Customer Support: Firms must provide consumers with the same amount of support during their use of the product or service as provided in the sales process. Firms must not nudge consumers to buy more than they are willing to purchase or employ “sludging” as a barrier to cancel- ing services or obtaining refunds.

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The new FCA Consumer Duty will shake up the way firms interact with their customers.The good news is that firms can utilize behavioral science to improve the customer experience.

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