2nd September 2024
Across the savings sector, effective communication should ensure that consumers truly understand their options. Clear, tailored, and straightforward communications build trust and empower consumers to make informed decisions about their savings accounts.
Communications relating to savings should help customers make informed and timely decisions. Good communication has other benefits too: it builds customer loyalty and customer trust, prevents confusion, misunderstandings, and, ultimately, should lead to fewer complaints.
The Financial Conduct Authority's (FCA) Consumer Duty requires financial services firms to deliver good outcomes for customers. This includes taking steps to ensure consumer understanding.
One year after the implementation of Consumer Duty, how are building societies, big banks, and challenger banks doing when it comes to communicating in a way that meets the challenge of the consumer understanding outcome?
To answer this question, we can look at data from Fairer Finance’s twice-yearly poll of up to 10,000 savings customers from across the UK (run by the fieldwork company Opinium). In our survey, we asked customers if their saving provider's communications help them make effective and timely decisions.
Vertical axis begins at 50% and concludes at 75% to visualize the differences between categories.
Based on the survey, 64% of respondents strongly agree or agree that building societies’ communications help them make effective decisions, followed by challenger banks at 60%, and high street banks at 59%. This suggests that while most people think communications are broadly doing the right thing, there is room for improvement, especially for challenger banks and high street banks.
UK savings providers face a complex challenge in meeting the FCA's consumer understanding requirements. They must carefully review interest rates, fees, and product features. Features designed to encourage savings should be regularly checked to ensure they truly benefit the target customers.
Clear communication throughout the customer purchase journey is crucial. Customers should be able to understand interest rates, fees, and terms with clear and simple definitions:
Marketing should accurately show how the product meets different needs. Examples of this included below:
Communications should also help customers make informed decisions. Some ways to do this include using tables with worked examples, highlighting key messages, or providing comparison tables to other products that might suit the customer better. Avoiding pressure selling tactics and prioritizing customer understanding are essential to meet the FCA's expectations.
Examples of communications that practice some of these methods are included below:
When creating savings products, providers should consider the overall customer experience. Fair value includes more than just the interest rate; it also involves the brand’s communication, customer treatment, and the overall experience. While it's important to offer competitive account features, together these features contribute to the value customers get from their savings account.