Have you gone word blind?
Why some financial service firms' blinkered perspective could mean their communications fall foul of the Financial Conduct Authority’s (FCA) Consumer Duty
A grey day in Canary Wharf, where I’m facing a whiteboard covered in red ink.
On it, a team of customer service advisors has written a list of financial jargon they think would be confusing for their customers.
There’s ‘equity’ and ‘AER’ and ‘capital’. But no one has written ’arrears’, so I ask why.
‘Oh, everyone knows that’, they reply in unison. ‘It just means what you owe’.
By saying ‘what you owe’, they’ve given me a straightforward alternative to ‘arrears’. And strangely, there lies the problem. It’s not the team’s inability to simplify this word. It’s their inability to see that it needs simplifying in the first place.
I call this word blindness. The more someone understands and uses a word, the less they see how confusing it can be to others.
With a common example of jargon like ‘arrears’, it’s not that this word will confuse all customers. It’s that it will confuse some of them – and it’s likely these customers are also the ones who need the most help.
Word blindness is a risk to companies’ efforts to meet Consumer Duty right now, because it's impossible to see your communications how your customers see them. So how do you get a clearer picture?
Focus on vulnerable customers
For financial services firms, focusing on people who need the most help is a good way to approach the Consumer Duty requirement about customer understanding. It says customers should be able to ‘understand the information they are given and make timely and informed decisions.’
If you know who your vulnerable customers are, and you understand their needs, you can create communications that meet those needs. These communications will work for the vast majority of your other customers, too.
That’s because whoever your customers are, they will prefer communications that use language that’s easy to understand. Countless studies show that everyone prefers plain English, even experts.
If you use certain wording designed for people with specific vulnerabilities, these can be signposted so they are targeted to those people. Everyone else can read or skip the information if they choose to.
It’s worth remembering that the average reading age in the UK is between 9 and 11 years old. What’s more, regardless of their reading level, the vast majority of your customers are not subject matter experts, and many will be coming to the information for the first time.
The proof is in the testing
Many financial firms have now rewritten and redesigned their customer communications, ready to present to their Board and the FCA, who will be looking for evidence that they meet Consumer Duty.
The question now is: how do they prove that these communications are understandable for their customers? Or, to frame it in terms of Consumer Duty: how do they prove that these communications will lead to good decisions and good outcomes?
There are all kinds of helpful tools and analysis you can apply, from readability measures like like ours to accessibility criteria. But only real customers can really answer this question. That’s where testing comes in.
The pitfalls of ‘internal testing’
Some firms are doing ‘internal’ testing, which in most cases means they’re testing communications with staff whose profiles fit those of their customers.
This seems sensible enough, or at least cost effective, until you remember word blindness. As similar as they might be in age, employment and lifestyle, staff are almost certain to have a better grasp of financial products, services and jargon than customers – even if the staff are customers themselves.
Some firms have tried to mitigate this problem by showing staff communications from a different department to the one they work in. So the sales team might look at debt letters and the marketing team look at complaint responses and so on. Nevertheless, their knowledge and understanding is likely to be significantly higher than someone who doesn’t work in the industry.
Will the FCA see internal testing like this as an effective approach to meeting Consumer Duty? Time will tell.
What’s certain is that customer testing is a much more meaningful way to understand whether your communications lead to good or bad outcomes. No testing is perfect. But qualitative testing like focus groups and in-depth interviews, alongside quantitative methods like A/B testing, are infinitely more insightful than testing comms with your staff.
The last word
Financial services firms don’t need to draft and test every type of communication for every customer segment.
A pragmatic and effective approach is to focus on customers who need the most support, and seek their perspective through testing. This gives you a solid set of insights and principles on which you can build communications that meet Consumer Duty requirements, adapting them where you need to.
It also enables you to build training that gives your teams the skills, tools and confidence to write clear communications. So if they’re ever asked to write a list of confusing financial jargon, ‘arrears’ will be the first word on the whiteboard.
