Can a concept newly established in financial services regulation help designers frame user experience from a different point of view?
The recent unveiling of the Apple Vision Pro AR headset felt similar to the 2017 launch of the original iPhone. Huge technical achievements, but just as important, they both offered ground-breaking simplicity in a world of rapid technological change. It’s why user-centricity is so core to digital design: understanding human needs helps maximise the potential benefits of technology.
This human-centred approach often finds designers helping organisations with transformation challenges: solving problems and improving services in innovative ways by taking into consideration the needs of an ever-expanding spectrum of stakeholders.
So when the UK’s financial services regulator, the Financial Conduct Authority (FCA), brought in its new Consumer Duty for July 31st 2023 – with its truly paradigm-shifting requirement for firms to “deliver good outcomes for retail customers”, including those with vulnerabilities – many firms have been looking to human-centred service design to support the cultural, operational and technological change needed to be compliant with it.
I believe the FCA’s vulnerability approach offers valuable insights useful for any organisation wanting to deliver sustainable products and services to diverse users. This Part 1 article sets out where the FCA’s approach came from, how the concept of vulnerability is being applied, and the implications for designers of user experience in general. Part 2 will look at how it can be put into practice.
The customer harm behind consumer duty
Financial services are distrusted by more than half of people in the UK according to the Edelman Trust Barometer. This is understandable after numerous high-profile consumer scandals.
Payment protection insurance (PPI) policies were sold for 20 years on credit cards, loans and mortgages to cover repayments if you lost your job or fell ill. In practice, PPI was sold regardless of whether people understood or needed it, mostly to maximise company profits rather than meet customer needs. The result: 12m customers receiving billions in compensation by January 2016.
Another was ‘payday’ loans. Claiming to help people in need of cash until they next got paid, the products superficially seemed to fulfil a customer need. But payday loan companies lent irresponsibly, trapping millions of often vulnerable people into debt spirals, with some customers paying interest rates of 5,000% and up.
These high-profile cases spoke to a broader pattern of financial services practices causing customers harm. The FCA’s Consumer Duty is aimed at fundamentally reshaping this.
Regulating conduct not compliance
The FCA was formed in the wake of the 2008 financial crisis to take a fundamentally different regulatory approach around the idea of conduct risk – how firms conduct their behaviour to affect outcomes for people.
To ensure that firms didn’t treat the regulation as a tick-box exercise, the FCA worked on a principles basis. Their 11 Principles for Business laid the groundwork for the new Consumer Duty Principle 12 of achieving “good outcomes” in four key areas of price and value, consumer support, consumer understanding and suitable products and services.
Essentially, this means firms must now consider the whole end-to-end customer journey for all of their retail activities, from the design of the products and services themselves to communications and after-sales support. They must also evidence how it all fits together to provide good outcomes for customers. Firms now have a responsibility—backed up by regulation—to place the customer at the heart of all they do. This is a state of affairs that simply wouldn’t allow PPI and payday loans practices to ever happen.
This is truly exciting for designers—particularly in the service design space—to see how a customer-centred regulatory framework might change not only individual customers’ experience, but also the actions of an entire industry.
But what does this all have to do with vulnerability?
A sea-change in financial services
The answer is that the idea of vulnerability is central to understanding and meeting the Duty, and why it’s potentially a far more radically innovative piece of regulation – and broader design approach - than it might first appear to be.
Vulnerability in the FCA context refers to the potential for people to be vulnerable to financial harm; the idea that things can happen that diminish people’s ability to manage their finances and make financial decisions. It also means these scenarios should be accounted for by regulated firms to make sure they don’t unduly disadvantage us, and that we all deserve financial wellbeing and should be helped as appropriate to achieve it.
The FCA outline four drivers of vulnerability:
- Health, for example physical, sensory or cognitive impairments or illness
- Life events, for example bereavement, relationship breakdown or job loss
- Resilience, or the ability to cope with new or difficult financial or emotional situations
- Capability, or differences in understanding or confidence when making financial decisions
What’s clear is vulnerability includes a wide range of human characteristics that can, and often do, overlap; and can and often do affect everyone at some point in their lives.
It’s not a new idea in the FCA world—guidelines around the fair treatment of vulnerable customers were first introduced in 2021. But with Consumer Duty, customers with these characteristics of vulnerability are required to receive the same benefits of improved outcomes as those without. Vulnerability isn’t an afterthought or something to be mitigated after the fact; it must considered upfront when designing any part of any FCA-regulated product or service.
For those of us who are inclusive design-minded, it’s ground-breaking. It requires financial services firms to explicitly pre-emptively mitigate potential harm and treat customers as complex human beings, not just as economic units of profit who should ‘caveat emptor’. This approach can be easily transferred to other industry sectors.
A new approach for UX design?
The FCA’s customer-centred regulatory framework that demands equal outcomes could provide an exciting new way to work with inclusivity more widely, including among non-designers.
On the face of it, accessibility and inclusive design seem simple enough ideas: designing for the widest range of people creates better designs and has benefits for users, product and service owners, organisations and wider society. But to non-designers, conceptually they seem vague enough not to seem actionable, or that they’re solely the downstream responsibility of designers or technical accessibility professionals and not a Board level priority.
The FCA’s vulnerability approach is outcome-focused and requires companies to proactively understand and take measures to prevent harm to customers and users. This requires input and understanding from across the organisation in its customer-facing and back-office operations —and at all levels—to ensure good outcomes for all customers, whatever their needs. And the potential result? Brilliant customer experiences and end-to-end services, with reduced complaints and compensation, customer churn and longer lifetime customer value.
From a design point of view, in many ways the lens of vulnerability approach actually goes further than accessibility and inclusion, which focuses on equity of access not outcome. In UX design, we often talk about designing for edge cases to ensure our designs work for a wide range of users, but the Consumer Duty and how it considers vulnerability questions the very idea of edge cases. It brings into sharp focus the reality that everyone is at risk of vulnerability, that we all have access needs, and that designing inclusively can only be done by integrating it as a foundational pillar of a design methodology.
The lens of vulnerability: a vehicle for inclusive design at scale
Therefore, vulnerability might really be a new way of thinking about and understanding what inclusive design actually looks like if we’re serious about applying it. This doesn't mean just to individual products or artefacts, but holistically across an entire service design.
This is truly exciting. It offers many possibilities that might take years to explore. With the Consumer Duty regulation only just having been introduced, and financial firms’ implementations only just starting to be assessed, we’re really only at the beginning of seeing what those possibilities may be.
In Part 2, the second part of this piece, I’ll discuss a way in which Cyber-Duck has been using vulnerability as a lens through which to understand customer journeys. I'll outline how the same steps and processes can be experienced in very different ways by people who on the surface appear to be quite similar. These UX learnings will be useful for any sector.