Consumer Duty: Building Design Synergies for Equitable Innovation

CONTEXT: The Consumer Duty regulation came into force on 31 July 2023. It was developed by the Financial Conduct Authority (FCA) in the UK to ensure that products and services provided by firms operating in retail financial markets meet the needs of vulnerable consumers. Any organisation selling to and servicing consumers in the UK are now under the obligation to take such needs into account at all stages of the product and service design cycle. The Consumer Duty sets the standard of care to protect consumers from current, new, and emerging drivers of harm, outlining the FCA's expectations to support innovation, competition and new ways of serving customers. THE CHALLENGE: In theory, The Consumer Duty directive is straightforward. It ensures that a company is customer-centric, that it delivers positive outcomes to consumers at every touchpoint and that it mitigates against foreseeable harms. The FCA envisages all firms to be data-driven, to utilise statistics and ratings metrics at both macro and micro levels, and to conduct customer-related research to understand their needs and vulnerabilities at the individual level. In reality, delivering on this mandate is very complex. Every business has their own limits and capabilities and not every organisation has services and products that can offer necessary flexibility and be immediately adaptable to follow the new regulations. This would require a massive cultural and operational shift. AIMS AND OBJECTIVES: The Consumer Duty by its nature has to be vague enough to be applicable to different types of financial service companies, at different points in their customer-centricity journey. However, this 'fuzziness' means that it can be difficult to interpret the new guidelines or to know exactly how the new rules should be implemented. The main aim of this secondment is to design pathways for businesses to become 'inclusive by default', moving away from defining consumers by disabilities and, instead, focusing on their needs. Anyone can be in a vulnerable position at any given time, therefore, our key objective is to design a new framework that could help the companies not only to monitor their customers' changing circumstances, but also act upon them, ensuring necessary level of care. APPLICATIONS: This secondment will pursue three lines of research leading to real-life applications and benefits: (1) to map what consumer data the companies currently hold in terms of appropriateness and accessibility, we propose to develop a Data Strategy Framework, which will help the companies, first, understand what Consumer Duty outcome their customer data relate to and, second, to recognise what data are still missing, in order to comply with the new regulations; (2) to improve customer understanding and to level up different organisations within the financial sector in terms of customer centricity, we will design Inclusive Toolkits, containing resources to help businesses make more inclusive design decisions across the product and service development; and (3) to provide the qualitative data to feed into the FCA database of Customer Needs and Behaviours, we will run customer research sandpits to collect evidence on existing and emergent needs and vulnerabilities.