Can regulations get in the way of customer understanding – our perspective on the FCA’s call for input
By Ben Perkins, Director of Partnerships and Services
The Financial Conduct Authority's (FCA) recent call for input on simplifying guidance is a welcome step towards simplifying regulation. This has the potential to make financial communications clearer for customers.
At Plain Numbers, we specialise in helping firms improve customer understanding through clear, understandable communication.
We know firsthand the challenges firms face in cutting through mandated wording and overprescribed rules to make important information as easy to understand as possible.
We have welcomed and championed Consumer Duty, but we believe changes to existing and prescriptive regulation could make it even more impactful.
Breaking Down Barriers to Customer Understanding
Our team has been working closely with FCA-regulated firms—and others outside the financial sector—to enhance customer understanding using our unique Plain Numbers Approach.
This evidence-based method, proven through randomised controlled trials, has doubled the number of customers who understand a communication. Organisations can achieve clearer, more meaningful interactions with their customers if the numbers and the words around them are communicated in a way more people will understand.
This works within the current regulations, and firms should be doing all they can to improve their communications even within current rules. We believe with changes to the existing rulebook it could go even further in improving customer understanding.
Through our work, we've identified three main barriers related to the current FCA handbook that limit firms' ability to fully meet the FCA’s Customer Understanding outcome under the new Consumer Duty:
Overly Prescriptive Language Requirements
Rigid Structure and Layout Rules
Excessive Disclosure Mandates
How Prescribed Language Can Impede Clarity
Many firms have expressed frustration with mandated language, which often makes it challenging to tailor communications based on customers’ unique needs and journeys.
Regulations requiring exact wording can prevent firms from adopting a “human-to-human” tone or adapting language for audiences with varied literacy or numeracy skills.
For example, while the Consumer Duty Guidance encourages firms to be mindful of vulnerable customers and to use straightforward language, prescribed wording doesn’t always meet these standards.
For information to truly resonate, language should be simple, relevant, and free from jargon or complex mathematical terms—qualities that prescribed language sometimes lacks.
Structured Layouts That Don’t Work for Everyone
A second barrier firms often encounter is rigid layout requirements. Regulations often dictate the order of information, and in some cases, even specific graphs or tables. While consistency has its benefits, it can also limit a firms’ ability to emphasise key points that matter most to customers.
Our experience shows that flexibility in layout—especially when it comes to presenting numbers and data —allows firms to make communications more digestible. For example, presenting critical information upfront and reducing emphasis on dense tables can make customers feel less overwhelmed, particularly those with maths anxiety.
Our unique expertise also shows us that graphs and tables are not always the clearest way to present numerical information. Sometimes they work well but communicators need to make a judgement call in each case. Prescription of specific tables does not allow them to innovate better ways of presenting the information.
Information Overload: When More Isn’t Better
The third issue is information overload. Customers can be overwhelmed by excessive disclosure requirements, which flood them with more information than they can realistically process. While some disclosure is essential, too much of it creates unnecessary complexity, often deterring customers from engaging with the content at all.
Our approach emphasises delivering information in a clear, prioritised way, ensuring that customers can focus on what matters most to their decision-making. The current rules around disclosure sometimes make this challenging, as firms are required to include a large amount of information—some of which may be extraneous.
Moving Forward: A More Flexible Path to Better Customer Understanding
We’ve seen that firms can indeed improve customer understanding within the current regulatory framework. These improvements can be significant and should be the focus of all firms looking to succeed against the Customer Understanding Outcome.
However, they could achieve even better outcomes with fewer restrictive guidelines. Rather than treating regulations as rigid rules, the FCA has an opportunity to promote an environment where firms can use their judgment to craft clear, effective communications. This is in the spirit of A New Consumer Duty, but the existing rulebook needs to be refreshed to align to the new outcomes focused regulatory approach.
This review could allow firms to adapt messages to best serve their customers. Such flexibility would empower firms to communicate complex information in simpler, more relatable ways that truly improve understanding and drive innovation in customer communications.
At Plain Numbers, we’re excited to see the FCA’s commitment to simplifying guidance and supporting firms in helping their customers make informed decisions. We look forward to continuing our work with regulated firms to foster customer understanding and, ultimately, contribute to better outcomes across the industry.
By opening these lines of communication and inviting industry feedback, the FCA could pave the way for a more customer-friendly financial landscape.