The history of the Consumer Duty regulations
The Consumer Duty regulations introduced by the UK Financial Conduct Authority (FCA) aim to establish a higher standard of consumer protection in financial services. The process started back in 2018 when the FCA began assessing how firms treat consumers, highlighting weaknesses in communication, fairness, and transparency. From their findings, work began on a consultation paper which became fully implemented in 2023.
The regulations cover new and existing products, focusing on ongoing monitoring and improvement.
The regulations
The guidelines ensure that financial service providers focus on customer understanding and outcomes.The products and services they offer must be designed to deliver clear, predictable, and positive outcomes for users. Communications must be easy to understand, enabling customers to make informed decisions based on clear information. Firms must act to ensure products are suited to customer needs and provide fair value.
The regulations support vulnerable customers. Customers should have the tools and information they need to make informed decisions. Financial service companies need to continuously monitor and evaluate the effectiveness of their offerings for all customers in order to ensure products meet their needs.
The risk of non-compliance
The FCA can impose substantial fines on firms found in breach of the regulations. The size of the fine depends on the severity of the breach and the firm's financial position.They may also be required to provide compensation to affected customers, covering financial losses or other harm caused by non-compliance.
The FCA can impose restrictions on a firm's activities, such as halting the sale of specific products or services until compliance is achieved. Not to mention the reputational damage if the findings are made public.
The design perspective
The following guidelines will help ensure compliance, though you need to do rigorous research and testing to make sure you’re following these guidelines:
Design should prioritise clarity in interfaces, ensuring users understand the benefits, risks, and features of financial products.
The language used should be simplified to improve readability and comprehension.
Navigation and design patterns should be intuitive to minimise confusion.
Design choices should be ethical; steering users toward decisions in their best interest without manipulation.
All interfaces should be fully accessible, complying with accessibility standards such as WCAG.
Users should be offered multiple communication options (e.g., live chat, phone support, self-service tools) so they are not left unsupported.
Feedback should be sought and behaviour analysed to identify current and potential issues and painpoints.
Continuous iteration and improvement is encouraged in order to stay compliant and ensure that all customers are catered for.
How to comply
Design with clarity, fairness, and inclusivity as central principles. You’ll want to foster trust by eliminating deceptive practices and building interfaces that prioritise user comprehension and accessibility.
One key area to prove compliance is regular testing and iteration, particularly with diverse audiences. Not only will this help you remain compliant with the legislation, but it will also enhance user satisfaction and ultimately loyalty.
We’re currently working with a multinational financial services company to research the usability of their design changes prior to launch. We’re running several agile studies on a range of different product areas using interactive prototypes. The results of these studies have led to confidence that new feature launches will meet squarely with the needs of their customers.