Testing a Firm’s Commitment to Customer Service

Roger Miles

25 years: Behavoural science & conduct

In this video, Roger explores how the FCA tests firms’ commitment to Consumer Duty through real examples of misconduct and behavioural challenges. He explains key issues like unfair charges, ‘sludge’ and ‘dark patterns’ in customer service, and highlights the serious consequences of non-compliance. Finally, he shares practical steps your firm can take to stay prepared and meet regulatory expectations.

Conduct

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Testing a Firm’s Commitment to Customer Service

9 mins 20 secs

Key learning objectives:

Understand how the FCA tests firms’ customer service using behavioural examples
Identify ‘sludge’ and ‘dark patterns’ in consumer harm
Understand consequences of non-compliance, including fines and reputational risk
Outline simple actions to stay compliant with Consumer Duty

Overview:

The Financial Conduct Authority’s (FCA) approach to Consumer Duty includes testing firms’ customer service through behavioural assessments and monitoring for misconduct such as unfair charges and obstructive practices. Recent examples highlight how the FCA challenges firms on product value, transparency, and treatment of vulnerable customers. Non-compliance can lead to warnings, fines, and serious reputational damage, making it essential for firms to take proactive steps to meet regulatory expectations and protect consumers.

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Summary

How has the FCA tested firms’ commitment to customer service?

The FCA has used behavioural tests over the years to assess how firms serve customers. For example, it examined unfair overdraft charges by tracking customers’ usage and identified vulnerable customers being heavily charged. This led banks to change their charging structures to avoid exploiting vulnerability. The FCA also challenges firms launching new products by asking if they provide value, durability, consumer choice, and protection, ensuring products genuinely benefit customers. Recently, the FCA introduced audits to spot misconduct like creating ‘sludge’ (unnecessary friction) or ‘dark patterns’ (misleading practices) that harm consumers.

What are some examples of behavioural challenges the FCA uses for new products?

When firms launch new products, the FCA asks four key questions:

Does the product meet a real consumer need (value)?
Is it expected to last as part of the firm’s core business (durability)?
Can consumers easily compare and choose alternatives (choice)?
Does the product protect consumers, especially vulnerable ones (protection)?

What types of misconduct is the FCA currently targeting under Consumer Duty?

The FCA focuses on two main behaviours:

Creating undue friction or ‘sludge’ that makes it hard for customers to cancel services, get refunds, or access compensation. This often secretly benefits firms at the expense of consumers
Using ‘dark patterns’ to mislead or confuse consumers, such as drip pricing, fake rankings, or hiding negative reviews. These practices obstruct genuine consumer choice and violate Consumer Duty principles

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Roger Miles

Roger researches behavioural risks in organisations, and advises senior leaders on how best to communicate risk and conduct matters. Previously, Roger ran risk communication programmes for professional bodies and the British Government. He now runs industry-level Academies for Conduct and Culture, and produces workshops with financial firms.

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