We've written a lot about online choice architecture (OCA), that is, how websites and platforms are designed to "nudge" customers into making certain transactional decisions. Regulators have concerns that some elements of platform design might not always be in consumers' best interests. The EU plans to deal with dark patterns in the forthcoming Digital Fairness Act (and there are already some rules in the EU's Digital Services Act) and UK law protects consumers from unfair OCA under the rules about unfair commercial practices in the Digital Markets, Competition and Consumers Act 2024.
However, it's not just the obvious bodies such as the CMA which take an interest in OCA. The FCA has recently published a report about the design of digital acquisition journeys and customer outcomes in the consumer credit market. Following some earlier research on digital design and sludge practices, it wanted to see how firms acquire customers through digital channels and how they are delivering good customer outcomes, in line with the expectations of the Consumer Duty.
The FCA's broad findings were:
- The design of digital platforms can encourage customers in a specific direction and can influence their understanding of products and features.
- When used well, the design can support good consumer outcomes.
- But customers can also be driven towards making quick decisions which may not be in their best interests or consistent with FCA expectations under the Consumer Duty.
- It encourages firms to consider how the design of customer journeys can affect customer understanding and their decisions when applying for credit.
Firms' target markets are likely to include a range of customers with a variety of needs and characteristics. Other circumstances, such as financial literacy, can also affect a customer's understanding of products and services. Under the Consumer Duty, the FCA expects firms to understand the needs, characteristics and objectives of customers in the target market, and this should inform the design of the product and customer journeys. Firms can test their communications where appropriate, including in digital journeys, to check that customers understand them and are supported to make effective decisions and act in their own interests. The Consumer Duty requires firms to monitor and regularly review customer outcomes.
Digital journeys produce significant amounts of data on how customers interact across firms' apps, websites and financial promotions. This can help firms to understand and monitor outcomes.
During the FCA's review and engagement with firms, it saw that analytics software can provide firms with data that gives deep insight into the customer journey. This may include identifying steps on a journey with a high dropout rate, such as the point at which customers are asked to enter payment details.
Next steps
The FCA will continue to monitor firms' approaches to digital journeys and app design. It will also consider how the design of digital products and services offers the required level of support and customer understanding when it engages with firms about the Consumer Duty.
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