Poll results: Conduct Risk and Insight Gaps

Thanks to those of you who participated in our short survey on use of Customer Insight to mitigate & report on your conduct risks to the FCA.

Our interim results suggest there are quite a few gaps still out there, with more work to be done by FS firm Customer Insight teams.

Here’s a quick summary of the findings so far from Customer Insight Leaders across Financial Services…

1. My company has a Consumer Segmentation that guides strategy, products, marketing & customer experience:

Half of you agreed with this statement, whilst half of you were either unsure or disagreed. So, this sounds a bit mixed, certainly not a ringing endorsement of having this foundation in place. Given the FCA have published Consumer Spotlight as their segmentation and a benchmark, it seems unwise for FS firms to still lack this critical insight input to strategy & target market definitions. I wonder what type of segmentation your business uses?

2. We clearly define Target Markets for all our products, including identifying vulnerable customers & those for whom product is unsuitable:

Here the results get more concerning. Two thirds of responders disagreed with this statement, with the other 33% being unsure. Given that target market definitions are required as part of product design/justification, by the FCA, this is unwise. If you have this gap, why is that? Are your product marketers unclear what is expected?

3. We bring our customers to life for everyone who works in our company & embed fair treatment in our culture:

Here the results are much more encouraging, echoing my experience of research teams in a number of Financial Services companies. Some research or wider Customer Insight teams spend a significant portion of their time running events & producing material to help change culture & colleague awareness. The results to date show all respondents agree or strongly agree with this statement.

4. We design products based on insight evidence of needs and track we continue to meet changing needs in product reviews:

Once we return to the topic of product design & evidence for the FCA the picture becomes bleaker. Here only 33% agree with the above statement, with the rest equally divided between those who disagree and those who aren’t sure. I wonder how these insight teams will support product teams during FCA visits with generated insights?

5. We consider behavioural biases in all our comms design & test for effectiveness in helping customers achieve a good outcome:

I’m not surprised to see this statement receive the worst scores. All respondents either disagreed or strongly disagreed with the above statement. Whilst spending some of my time training FS firms (marketers, insight & risk teams) on use of customer insight for conduct risk management, I find very little understanding of how to respond to Behavioural Economics challenge. Whilst most FS professionals have at least heard of the term, few appear to understand what the FCA expects (despite their first occasional paper being many years ago now). Very few if any customer insight leaders appear to know how they would test comms or construct experiments to identify potential; behavioural biases.

From one perspective, I am encouraged to see a need for a service that I’m marketing. However, given I’m also a customer of financial services companies and have met with some very capable people at the FCA, I’m also concerned. It appears much more focus is needed in this area. Too few firms realise that their Customer Insight team is actually a key to unlock the confusion that too often surrounds Conduct Risk and FCA expectations. I hope best practice will continue to grow to address this.

How are you facing into this challenge, if it’s relevant to your market?