Consumer Duty: Consumer Understanding Outcome
Consumer Understanding Outcome [PRIN 2A.4]
Rule: Firms must ensure their communications enable customers to make informed decisions. Information must be clear, fair, and not misleading.
Communication Standards
| Standard | Requirement |
|---|---|
| Clear | Easy to understand, plain language, appropriate format |
| Fair | Balanced, not emphasising benefits over risks |
| Not misleading | Accurate, complete, no material omissions |
| Timely | Provided when customer needs it for decisions |
| Tailored | Appropriate for target audience characteristics |
Key Information Requirements
Customers must understand:
- Key features of the product or service
- Key risks and limitations
- Costs — all charges and when payable
- Rights — cancellation, complaints, redress
- Actions required — what customer needs to do
Testing Communications
| Test Type | Method |
|---|---|
| Readability | Plain language, reading age appropriate |
| Comprehension | Customer testing, focus groups |
| A/B testing | Compare communication effectiveness |
| Behavioural testing | Does customer take intended action? |
Vulnerable Customers
Communications must be accessible to vulnerable customers:
- Consider literacy, numeracy, digital skills
- Provide alternative formats
- Allow extra time for decisions
- Train staff to identify and support
Channel-Specific Requirements
| Channel | Considerations |
|---|---|
| Digital | Mobile-friendly, accessibility standards |
| Written | Readable font, clear layout, key info prominent |
| Verbal | Clear speech, confirmation of understanding |
| Video/Audio | Subtitles, transcripts, clear audio |
Prohibited Practices
- Burying important information in small print
- Using complex jargon without explanation
- Emphasising benefits without balancing risks
- Creating false urgency
- Misleading comparisons